Illinois cannabis transporters say competitors operating without licenses

A group of licensed cannabis transporters have filed suit against Illinois regulators, claiming the state is allowing unlicensed operators to transport marijuana.

Those targeted in the suit say the dispute is more a matter of transporters having great difficulty getting any business in Illinois because growers can provide their own delivery service.

Thirteen transport companies filed the suit Tuesday in Sangamon County against the Illinois Department of Agriculture and its director, Jerry Costello II. An spokeswoman for the agency said it does not comment on pending litigation, but is not aware of any illegal transporters.

A transportation license allows the holder to deliver cannabis from a grower to retail stores around the state. It was seen as the easiest way for minority owners to break into the legal cannabis business. Transporters have the lowest barriers to entry and are much less costly to start than a cultivation or retail facility.

But many weren’t able to get hired because state law allows growers to ship their own products. Only 31 transport companies have been licensed, plus the 21 big cultivation centers.

In January, the plaintiffs said, they reported an unlicensed transporter delivering cannabis to a store. The suit alleges that state officials said they didn’t have the staff to police such violations.

“As minority-owned cannabis transporters, it was difficult as it is to simply operate in the industry, but now the state is making that even harder,” said David Scott, owner of Vertical Management LLC in Bellwood. “We should not be punished for doing things the right correct way.”

Because cannabis remains illegal under federal law, federally chartered banks are generally prohibited from doing business in the industry. That means that most transactions must be paid by cash. Licensed transporters are required to have on-board cameras and location trackers, but unlicensed transporters don’t have to meet such requirements, creating a potential safety hazard.

The suit includes photos of an unidentified driver said to be delivering cannabis in a noncompliant Honda minivan.

The suit also accused Star IL Grow LLC, which operates Star Buds craft grower in Rockford and a dispensary in Burbank, of transporting its products to a dispensary in Chicago in February of this year before its license became “operational.”

Star Buds COO Ahmad Joudeh denied the claim, and shared a copy of his license, which was issued in July 2022.

“We do have a license,” he said. “You can’t just make false claims like that.”