Judge set to rule Thursday on requests to dissolve TRO, order bond in suit over pot-growing license

By Bethany Krajelis | Mar 18, 2015

A Cook County judge on Thursday will rule on a pair of issues in a case challenging the state's new medical marijuana program.

A Cook County judge on Thursday will rule on a pair of issues in a case challenging the state's new medical marijuana program.

After listening to arguments from three parties for about two hours Wednesday, Cook County Circuit Judge Kathleen Kennedy said she will hand down decisions from the bench at 3 p.m. Thursday on a motion to dissolve the temporary restraining order she issued earlier this month and requests to make plaintiff PM Rx post a $2 or $2.2 million bond.

PM Rx sued the Illinois Department of Agriculture last month following the Feb. 2 announcement from Gov. Bruce Rauner’s administration regarding the winners of  licenses to grow and sell pot under the medical marijuana pilot program.

PM Rx had applied for the license to grow in the Kankakee area, but lost out to Cresco Labs, which won a total of three states licenses. The new program allows for one cultivation license to be issued in each of the state's 22 police districts.

Cresco was added as a defendant to PM Rx's suit earlier this month, after Kennedy ordered it to do so and entered a temporary restraining order to prevent the state from awarding the permit for Illinois State Police District 21, the one at issue in the suit.

At Wednesday afternoon's hearing, which lasted roughly two hours and ended without a ruling, Steven Levy, one of the attorneys representing Cresco from Goldberg Kohn Ltd. in Chicago, asked Kennedy to dissolve her March 4 TRO.

Levy said it should be dissolved because his client didn't have a chance to respond since it wasn't named a party to the suit until after the TRO was entered, thus violating its constitutional rights. He also said the TRO should be dissolved because PM Rx can't show it it has a likelihood of being successful on its claims.

During the hearing, Levy called PM Rx's arguments "nonsensical" and said they were unsupported by the law. He also offered a series of "what if's," but essentially said no matter how PM Rx's arguments claims are looked at, they just can't stand.

In its initial lawsuit, PM Rx accused the state of failing to follow its own rules for reviewing and scoring applications for pot-growing licenses and not conducting the required background checks before awarding Cresco the District 21 permit.

The company also pointed out that Cresco’s lead cultivator and consultant Kayvon Khalatbari has publicly admitted his past history as a dealer and consumer of illicit drugs, and alleged Cresco lacked the funding necessary to be awarded licenses in three districts.

Levy said his response to those arguments is "so what?" He said his client followed all of the rules and that Khalatbari's past is irrelevant because he was not convicted of a crime that the program's law says should exclude someone from obtaining a license.

PM Rx, according to Levy, isn't trying to follow the rules, it is trying to rewrite them by lodging arguments that are "all smoke and mirrors." He said it's ironic given that its lawsuit claims the state isn't following its own rules.

On behalf of PM Rx, John Rooks of Fisher Kanaris told Kennedy that just because Cresco doesn't like its arguments and the case law it chose to cite, doesn't mean they aren't valid under the law. He called some of Cresco's arguments "silly and frivolous."

He said the TRO didn't violate Cresco's rights because it wouldn't have made a difference if it had been given notice and named as a defendant earlier. He also said it seemed like a tactical decision for Cresco to wait to challenge the TRO until it was named even though it had to been aware of the suit from the media and could have tried to intervene earlier.

Rooks further argued that Cresco lacks the standing needed to ask for the TRO to be dissolved. He said Cresco was not party to the TRO because it was not a named party and the TRO prevented the state from taking action on the District 21 license.

In addition, Rooks told Kennedy he thought Levy's "so what" response to the fact Cresco's lead cultivator admitted to being a drug dealer was "wildly inappropriate."

Besides the TRO issue, Kennedy also heard arguments over requests to make PM Rx post bond from both Cresco and the state, which was represented by Assistant Attorney General Alice Keane at Wednesday's hearing.

Cresco wants the judge to make PM Rx post a $2 million bond. It suggested that amount during a March 10 hearing based on profits it claimed it will lose as a result of the TRO, as well as being “behind the eight-ball” in comparison to other cultivation centers and construction-related costs.

On behalf of the state, Keane asked Kennedy to order PM Rx to post a $2.2 million bond, noting that that is the amount it would have to post in order to get a grow license from the state if it were awarded one. Cresco apparently has already posted that amount.

She also stressed that along with Cresco, the state will be harmed by the TRO. She said it is causing a disruption in the program and that if it continues, patients under the medical marijuana program could be affected by limiting the amount of pot being grown.

In addition, Keane said the TRO could cause a delay or loss in sales tax the state could collect in regards to the District 21 license.

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