Controversial Chicago Dispensary Wins Zoning Approval

Editors Note: This is republished with permission from Crain Chicago and written by John Pletz.

GRI Holdings wins zoning approval as Illinois gets ready to begin issuing long-awaited licenses this week.

GRI Holdings, one of the most controversial winners of new retail marijuana licenses in Illinois, is on its way to opening a downtown store.

The company, whose owners include restaurant owner Phil Stefani and former Chicago police commander Tom Wheeler, won approval Friday from the Zoning Board of Appeals to open a pot shop in the former Carson’s Ribs restaurant at 612 N. Wells St.

It’s the latest step in a long, strange journey that began more than two years ago, when the state of Illinois began accepting applications for new retail licenses, and has included lawsuits, lotteries, and, in GRI’s case, even a pandemic payroll protection loan.

The Illinois Department of Financial & Professional Regulation is expected to issue the first round of 185 new licenses to GRI and other lottery winners, starting with 119 licenses in the Chicago area. Because of litigation and other delays, the new retail licenses are more than two years behind schedule. With just 110 dispensaries statewide, the lack of stores has held back the growth of the industry in Illinois and hurt sales of existing cannabis companies, such as Cresco Labs, Green Thumb Industries (OTC: GTIBF) and Verano Holdings, which also sell marijuana to other retailers. Marijuana sales in Illinois have fallen over the past two months.

GRI hopes to open its first store, on Wells Street, this fall, Wheeler says. It would be one of the first new license holders to set up shop. Others who’ve received zoning approval include Mint Ventures, which will open at 201-15 N. Clinton St., and Green & Foster, which plans a store at 2114 S. Wabash Ave. Other new entrants, such as Blounts & Moore, have filed for zoning approvals.

GRI’s store will be the fourth in River North, joining Ascend, Cresco Labs, PharmaCann.

“After all that waiting, we’re really excited for it to come to fruition,” says Wheeler, noting that he worked in the neighborhood as a police officer.

The company told the city it expects to spend about $2 million turning the 6,400-square-foot former restaurant into a marijuana outlet, which will be called Green Rose Dispensary.

GRI was one of 21 applicants that received perfect marks in the initial scoring, setting off a round of complaints and scrutiny about a licensing process that was designed to favor “social-equity” applicants as a way to diversify ownership of the cannabis industry.

To achieve social-equity status, applicant groups had to be led by people who lived in neighborhoods disproportionately impacted by poverty, violence and enforcement of marijuana laws as part of the war on drugs—or those who had arrests or convictions for marijuana possession or their family members also could qualify.

A third way to achieve social-equity status involved companies employing at least 10 workers who met the requirements for residency or criminal records. The hiring approach proved controversial in minority communities, where it was quickly derided as the “slave-master” clause.

Although the hiring method was used by GRI, Wheeler defends the company’s social-equity qualifications. “I come from a disproportionately impacted area in Roseland,” says Wheeler, who also is a partner in a cannabis-consulting firm. “I still live here.”

The law required these companies to make the hires before they got the license and to keep them employed. The state had intended to issue licenses by May 2020, but COVID and other problems delayed lotteries for more than a year.

Marijuana is federally illegal, which prevents cannabis companies from getting traditional loans or banking services. Wheeler says when Hinsdale-based GRI applied for a PPP loan from the Small Business Administration, “we weren’t a cannabis company at that time. We had no license at that time.” Federal records show the $44,037 loan made in May 2020 was forgiven by the SBA.