Lawsuit over medical marijuana cultivation in Kankakee

It is disputed whether Quinn ever met with the Plaintiff’s competitor who won the bid for a license.

Alleged delays and errors in the implementation of the medical marijuana pilot program in Illinois led to a recent lawsuit regarding the requirements for establishing cultivation centers and dispensaries. Under the Compassionate Use of Medical Cannabis Pilot Program Act, January 1, 2014, there are 22 districts and no more than one license may be issued per district, regulated by the Department of Agriculture administrative rules, approved by the JCAR committee overseeing implementation of the law.

The Plaintiff company, PM Rx LLC of Chicago, competed for the license to operate a cultivation center in District 21 in Kankakee. Its competitor, Cresco Labs won three of 21 licenses to cultivate medical marijuana. The scoring process is being challenged in the lawsuit filed in Cook County. Named as defendant is the Department of Agriculture’s acting director, Philip Nelson.

The lawsuit claims problems in the process of awarding licenses during the Quinn administration.

The issue for the court is whether the bidding and selection process was conducted properly under the medical marijuana law. The system established to process and weigh competitive applications for licenses could be improperly designed and/or improperly evaluated. Either way, blame lies with former Illinois Gov. Pat Quinn, whose successor, Gov. Bruce Rauner, stated he would work with court to review the process.

“”We understood and acknowledged that the process the Quinn administration applied would likely expose the State to significant and costly litigation,” Rauner’s office stated in an email. “We believe the steps we took to fix the errors in the Quinn selection process reduce, but cannot entirely eliminate, the risk of litigation.[i]”

It is disputed whether Quinn ever met with the Plaintiff’s competitor who won the bid for a license.

In the lawsuit, PM Rx claims that its competitor, Cresco scored lower and should not have won the bid for the cultivation license, and that when a representative from Cresco had a meeting with then Gov. Quinn, they ended up with a higher score. A Spokesman for Quinn denies the allegation. There was a ban on state regulators meeting with applicants during the process of candidate selections and PM Rx alleges Quinn acted improperly.

In a recent update, Illinois Medical Cannabis Pilot Program: Implementation Update #3, we identified some of the rules and changes implemented since the effective date of the law. In this update the requirements for cultivation centers are listed. Including raising the money and capital required by the state, PM Rx claims it met all the stated requirements and possessed a higher score and therefore should have been awarded a cultivation center license over its competitor.

In other medical marijuana news, some individuals are not so patient.

Meanwhile, some individuals attempted to start selling medical marijuana licenses prematurely, risking a complaint for violating the new law. For more, read Caution: “Medical cannabis clinics” are not yet authorized to open shop, complaint issued.

Michael V. Favia & Associates will continue to report on the news about the implementation of the medical marijuana law in Illinois. Michael V. Favia is also an attorney of counsel to the law firm of Quintairos, Prieto, Wood & Boyer, P.A., a business oriented law firm with offices in several states, representing clients similar to the individuals involved in this lawsuit over District 21 in Kankakee.

Michael V. Favia & Associates are available to assist physicians with professional licensing matters and lawsuits. With offices conveniently located in the Chicago Loop, Northwest side and suburban meeting locations, you can schedule a discrete meeting with an attorney at your convenience and discretion. For more about Michael V. Favia & Associates’ professional licensing work, please visit www.IL-Licensing.com and feel free to “Like” the firm on Facebook and “Follow” the firm on Twitter.

[i] Chicago Tribune, Lawsuit challenges Illinois process for medical marijuana licensing. By Robert McCoppin, Feb. 25, 2015.

Caution: “Medical cannabis clinics” are not yet authorized to open shop, complaint issued.

Our firm has already been contacted by several interested parties and we have commenced preparation of the documents necessary to initiate the process.

We reported in March of this year that Illinois approved a pilot program for medical marijuana. In our article, The business of medical marijuana in Illinois: stay tuned, attorney, Michael V. Favia stated in response to the new law, “I think this is a fast moving business opportunity with huge potential for those who can get it up and going as soon as possible. Our firm has already been contacted by several interested parties and we have commenced preparation of the documents necessary to initiate the process. In the meantime, there’s an extensive amount of complexity involved in securing these marijuana outlets, which requires the necessary expertise and the appropriate staff to move it along quickly.  Many, if not most, interested parties have already commenced taking steps in a business that looks to be very lucrative if operated correctly.”

The regulations are still being established and the program is not active yet.

Today certain segments of the regulatory scheme are still underway with the agencies involved in overseeing the policy and processes involved in the Medical Cannabis Pilot Program, the Illinois Department of Agriculture (“IDOA”), the Illinois Department of Financial and Professional Regulation (“IDFPR”), the Illinois Department of Public Health (“IDPH”) and the Illinois Department of Revenue (“IDOR”)[i].

Since the pilot program became law January 1, 2014, the IDFPR has been warning the public to wait for the green light on cannabis clinics. On July 15, 2014, a legislative committee approved proposed regulations for growing, dispensing and registering patients under the Act, the IDFPR has not issued any licenses to grow or dispense medical marijuana. In fact, the physician certification forms are not available yet. The forms for physician, patient and caregiver certifications are scheduled to be available sometime this August.

It is illegal to operate or doing business with any dispensary before the law allows.

A formal complaint was recently filed against Dr. Joseph Starkman, “for establishing a cannabis clinic and operating that clinic in violation of both the Compassionate Use of Medical Cannabis Act and the Medical Practice Act,” according to recent reports and warnings by the IDFPR[ii].

Dr. Starkman, according to the IDFPR complaint, opened a cannabis clinic and in late 2013, he required a 79-year old patient to pay a fee in the amount of $250 prior to an office visit. The doctor then met with his patient and reviewed medical records showing he was diagnosed with glaucoma. Dr. Starkman, without performing an eye exam, declared his patient eligible for medical marijuana and sent him home to wait for an official certificate to come in the mail, for use at Illinois-licensed dispensaries.

To read more about this case, you may review the IDFPR press release and the official complaint against Dr. Starkman and the alleged certificate offered to his patient. The prayer for relief from the Court in the complaint is for the suspension and/or revocation of Dr. Starkman’s Physician and Surgeon License and to be otherwise disciplined.

Any conduct that violates the laws governing a licensed professional practice can cause the loss or suspension of the individual’s license to practice their craft. Michael V. Favia and Associates advises and represents professional license holders and applicants. Michael V. Favia & Associates are available to help and meet for client consultations with offices conveniently located in the Chicago Loop, Northwest side and suburbs so you can schedule a discrete meeting with an attorney at your convenience and discretion. For more about Michael V. Favia & Associates’ professional licensing work, please visit www.IL-Licensing.com and feel free to “Like” the firm on Facebook and “Follow” the firm on Twitter.

[i] Law Firm of Michael V. Favia & Associates in Chicago, Illinois Medical Cannabis Pilot Program: Implementation Update #3.

[ii] eNews Park Forest, Regulators Charge Chicago Area Doctor with Cannabis Violations. Jul. 28, 2014.

Illinois Medical Cannabis Pilot Program: Implementation Update #3

Our firm has already been contacted by several interested parties and we have commenced preparation of the documents necessary to initiate the process.

Cultivation centers, dispensaries, patients and caregivers, and taxes are the subjects of a recent update announced by the State of Illinois as it begins the formal rulemaking process for the implementation of the Compassionate Use of Medical Cannabis Pilot Program Act. Involved in the process of rulemaking are the three main agencies involved: The Illinois Department of Agriculture (“IDOA”), the Illinois Department of Financial and Professional Regulation (“IDFPR”), the Illinois Department of Public Health (“IDPH”) and the Illinois Department of Revenue (“IDOR”).

The proposed rules have been available for review and comment on the state’s Medical Cannabis Pilot Program website for more than 70 days and will remain for an additional 45 days for comment and suggestion until the Illinois General Assembly’s Joint Committee on Administrative Rules (“JCAR”) takes its next step in further review of the proposed rules.

Directly from the Illinois Medical Cannabis Pilot Program – Update #3^[1], the following changes have been incorporated into the proposed rules:

Cultivation Centers

• While the Act calls for one cultivation center in each of the 22 Illinois State Police Districts statewide, District 15 is the Illinois Tollway system. Therefore, the proposed rules reflect that only 21 cultivation center licenses will be issued at this time. One entity can be awarded licenses for up to three cultivation centers.
• IDOA will inspect each facility at least weekly and live security camera video will feed to IDOA and to the Illinois State Police (ISP).
• The single-stage application process includes a $25,000 non-refundable application fee, proof of $500,000 in liquid assets and documentation satisfying selection and optional bonus criteria. Applications will be scored by an IDOA-selected team.

Dispensaries

• The rules define residential zoning areas to address the dispensary location concerns of some cities and counties. IDFPR will permit up to 60 dispensaries around the state. One entity can receive permits in up to five districts.
• The two-stage application process includes a $5,000 non-refundable application fee, proof of $400,000 in liquid assets and documentation satisfying selection and optional bonus criteria. Applications will be scored by an IDFPR-selected team.

Patients and Caregivers

• Reduced registration fees are $100 for eligible patients; $50 for eligible patients on Social Security Insurance and Social Security Disability Insurance, as well as veterans; and $25 for caregivers.
• Previous language regarding Firearm Owners Identification (FOID) cards and medical cannabis identification cards has been removed. The State is continuing to examine how the State’s medical cannabis and firearm laws may interact with federal firearm laws.
• An expanded 15-member Medical Cannabis Advisory Committee, which now includes qualifying patients, a health care provider with general practice experience and nurses or nurse practitioners with experience working with medical cannabis patients, will review petitions to recommend adding qualifying medical conditions twice each year.
• The rules clarify physician written certification language and pre-operation cultivation center inspections.

Taxes

• Cultivators will pay a 7 percent privilege tax on sales to dispensaries and patients/caregivers will pay a 1 percent sales tax.

As more updates become available, the law firm of Michael V. Favia & Associates will share those updates. The firm counsels and represents individuals interested in setting up legal and compliant business operations to join in the big business of medical cannabis in Illinois.

Michael V. Favia & Associates operates offices conveniently located in the Chicago Loop, Northwest side and suburban meeting locations, so you can schedule a discreet meeting with an attorney at your convenience and discretion. For more about Michael V. Favia & Associates’ professional licensing work, please visit www.IL-Licensing.com and feel free to “Like” the firm on Facebook and “Follow” the firm on Twitter.

^[1] Illinois.gov: Medical Cannabis Pilot Program, Update on April 18, 2014.