Lawsuit Accuses Cannabis Companies of ‘Chicago Cartel’

A federal lawsuit filed this week accuses Chicago-based cannabis companies of running a “cartel” and seeks to end cannabis licensing caps, divest the existing companies of all their assets, and legalize all amounts of cannabis.

Full story after the jump.

A federal lawsuit filed April 18 accuses cannabis companies in Chicago of running a “cartel” and alleging state-licensed cannabis businesses are violating anti-trust law under the Clayton Act, the Chicago Tribune reports. The lawsuit was filed by True Social Equity in Cannabis, which includes consumers, workers, and potential competitors in the industry, and seeks to force the state to drop limits on licenses and legalize all amounts of cannabis.

The defendants in the case include Akerna Corp., Green Thumb Industries Inc., ILDISP LLC, Verano Holdings Corp., and Surterra Holdings Inc. The lawsuit aims to stop all of the companies from selling cannabis and divest them of all of their assets.

Edie Moore, a founder and legislative co-chair of Chicago NORML and a cannabis business license applicant, told the Tribune that the suit is “crazy talk” and the solution to adding licenses is for the state to issue pending licenses for social equity applicants which remain in limbo due to legal challenges.

“People who keep suing don’t do anything but slow it down. It doesn’t help anyone.” – Moore to the Tribune

Michael Sampson, a cannabis industry attorney who has represented one of the defendants but has no connection with this case, told the Tribune that he is unsure the lawsuit “would survive a motion to dismiss.”

“There are a lot of general outlandish unsupported allegations,” he said in an interview with the Tribune. “This type of name-calling harms the entire industry.”

The lawsuit alleges proof of the “Chicago Cartel” is evidenced by the fact that the companies sell each others’ products; however, state law requires that dispensaries sell the products of their competitors.

Akerna, which is an industry software company, said the lawsuit “has multiple inaccuracies,” including claims that it is a plant-touching company.

The lawsuit also alleges the family of Gov. J.B. Pritzker (D) is controlling Akerna – a claim he denied in a statement to the Tribune.

“From the very beginning, the Pritzker administration has prioritized equity and accessibility in establishing the legal cannabis industry,” the statement says. “While the issuance of new licenses currently remains on hold due to a court order, the administration remains committed to helping applicants from diverse backgrounds enter and remain part of the state’s cannabis industry and we are hopeful the courts will allow us to move forward with issuing licenses soon.”

The lawsuit was filed by attorney Mark Lavery in the U.S. District Court for the Northern District of Illinois.

While it remains unclear whether the lawsuit will bring actionable information to light, the issue of large cannabis corporations lobbying to prevent smaller operators from entering the market has been widely criticized within the industry and is frequently cited as one of the main contributing factors to the racial discrepancy in cannabis business ownership, with a disproportionate majority of cannabis licenses awarded to white applicants in virtually every market. This type of lobbying was acknowledged in an apology letter to the industry from James Whitcomb, CEO of the multistate cannabis operator Parallel, earlier this year (Parallel was co-founded by a member of the Wrigley family, which was criticized in the suit).

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