Not So Blind Item – The IDFPR is in a Pickle Over Its Tiebreaker Rule

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Many in Illinois have been waiting with bated breath for the Illinois Department of Financial and Professional Regulation (IDFPR) to issue new (conditional) adult use cannabis dispensary licenses and it appears that wait may not end anytime soon. By way of background, under the Cannabis Regulation and Tax Act, an ambitious and precedent-setting social equity centered piece of legislation, these license were to be issued before May 1, 2020. But along came COVID-19 and Governor Pritzker’s Gubernatorial Disaster Proclamation resulting in a seemingly indefinite delay of the May 1st deadline. Since the April 30th deadline postponement announcement, the IDFPR has yet to announce a new date by which it expects to issue these licenses, or to say much of anything at all on this topic.

In addition to COVID, there is another fly in the ointment. On December 9, 2019, the IDFPR published emergency rules that established a tie breaking mechanism between tied applicants. This emergency rule can be in effect a for a maximum of 180 days, which carried it well past the established May 1st deadline. Moreover, no emergency rule may be adopted more than once in any 24-month period. Low and behold that tie-breaking rule expired on June 5, 2020, leaving the IDFPR without an applicable tie-breaking mechanism. This prompted the IDFPR to initiate the process for issuing a permanent rule for the tiebreak procedure (https://www.idfpr.com/Forms/COVID19/IDFPR%20Tie%20Breaker%20Rules.pdf). But establishing permanent rules can be a slog, taking anywhere from 90 days (best case scenario) to a year, before the proposed rule can be adopted.

Typically, the rulemaking process must undergo public comment and Joint Committee on Administrative Rules (JCAR) review prior to adoption. It is unclear whether there is a way for this process to be expedited here. Generally speaking, the process begins with the “First Notice” period, where the agency (IDFPR) must accept comments from the affected public. This period continues for at least 45 days, but the agency can extend it.  A public hearing is only held if requested by, among others, JCAR, the governor, an affected local government, or 25 interested individuals. Requests for public hearings on proposed rulemaking must be submitted to the agency within 14 days after the proposed rulemaking is published in the Illinois Register. Next, a “Second Notice” is filed along with documents that include any changes. After JCAR accepts the Second Notice, the rulemaking is scheduled for consideration at a JCAR meeting within the next 45 days (the Second Notice period). If JCAR takes the action of “No Objection,” then the IDFPR can adopt the rules. If the agency fails to adopt the rules within a year, the rulemaking expires and cannot be adopted. But if there is an “Objection,” the IDFPR would have to respond within 90 days, and is precluded from adopting the rulemaking until JCAR has received the response. Only after JCAR approves the notice with “No Objection” can the rules can be adopted.

Unless there are somehow no ties, it is highly unlikely that the IDFPR will issue licenses without a tiebreaker in place. And given the timetable described above, we could be in for an even longer wait. Nevertheless, Toi Hutchinson, Senior Advisor for Cannabis Control to Gov. Pritzker, recently remarked during a meeting with Cook County’s newly formed Cannabis Commission that regional winners may be announced as early as this month (will be available at https://cook-county.legistar.com/Calendar.aspx). Those winners will then likely proceed to the tie-breaker, once that mechanism is put back into place.

As with all new programs, bumps in the road are expected, and particularly so when that program launches during a pandemic. A great deal is at stake here for many and it’s important to get this right. We will continue to monitor any developments closely so please check out our blog for continued updates.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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