Ill. Judge Finds Property Interest in Right to Dispensary License

A federal district court in Illinois broke with longstanding precedent by allowing a 14th Amendment constitutional challenge to proceed to trial after applicants who were denied a license to open a marijuana dispensary sued the state, claiming the denial to be a deprivation of property without due process. The authoring judge, Mary M. Rowland, rooted her opinion in the failure of previous courts to properly interpret appellate case law around what constitutes a protectable property interest under the Due Process Clause.

The applicants alleged that following applications for dispensary licenses under the Illinois’ Compassionate Use of Medical Cannabis Act, the state denied the licenses on the basis that the applicants failed to meet the requirements. The Act provided 60 licenses throughout the state, distributed based on county population. All 60 licenses must be distributed, and an applicant could apply for a license in up to five counties. The applicants proffered that the state could not deny their qualifying applications as each applicant applied in areas with no other qualifying candidates.

Given the lack of other applicants and the purported qualifying applications of the plaintiffs, the denied applicants asserted the possession of a protected property interest (a right to a license mandated by the Act) without “insufficient procedural protections in effectuating that deprivation” in that the state “refused to open a new application period for over five years.” This, according to the court, stood to be all the plaintiffs needed to allege in order to survive the state’s motion to dismiss.

Judge Rowland explained that while long-standing precedent in the state barred a constitutionally protected property in the right to a license, it did so in violation of 7th Circuit jurisprudence. The correct interpretation held that one maintained a property interest in a license under the 14th Amendment if the licensing scheme “gives people a benefit and creates a system of nondiscretionary rules governing revocation or renewal of that benefit.” Given the Act states that Illinois “may not issue less than 60 registrations if there are qualified applicants” while the plaintiffs alleged in their pleadings that they have “compliant property in a district with an available license, and they are the only party who meets that criteria for a district with an available license,” the motion to dismiss could not be granted.