Pubdate: Sat, 14 Feb 2015
Source: Chicago Sun-Times (IL)
Copyright: 2015 Sun-Times Media, LLC
Contact: http://mapinc.org/url/5QwXAJWY
Website: http://www.suntimes.com/
Details: http://www.mapinc.org/media/81
Author: Becky Schlikerman

1ST LAWSUIT FILED OVER MEDICAL POT LICENSING

The conflict between the states and the federal government when it 
comes to legalized medical marijuana may play out in an Illinois court.

What is believed to be the first lawsuit regarding medical marijuana 
licenses in Illinois was filed Friday in downstate Coles County by a 
business that lost out in its bid to get a license to grow medical marijuana.

The business, Shiloh Agronomics LLC contends that the company it lost 
out to, Shelby County Community Services Inc., was improperly given 
the license because it is a nonprofit organization that receives tax 
benefits from the Internal Revenue Service, a federal agency.

"The concern is that because Shelby County Community Services is a 
federally recognized 501( c)( 3) tax-exempt entity, it is not 
eligible to apply for a permit to engage in an activity that violates 
federal law," said Jude Sullivan, whose father, James Sullivan, holds 
a large stake in Shiloh Agronomics.

A representative for Shelby County Community Services did not respond 
to requests for comment. A state spokesman declined to comment on the 
allegations made in the lawsuit.

The Shelbyville nonprofit provides services and employment to people 
with developmental disabilities. The group's executive director has 
said the marijuana farm could provide more jobs, according to local 
media. The group also provides substance- abuse counseling.

But once the IRS gets wind of Shelby County Community Service's foray 
into the medical marijuana industry, it could determine the Illinois 
group is not eligible for the tax exemption, said attorney Adam 
Fayne, who does not represent the nonprofit or the company suing it 
but has worked with other marijuana license applicants.

Involvement in the medical marijuana industry, even if it's legal in 
Illinois, means a violation of federal law and the IRS' requirement 
that nonprofit groups be "equated with the public good."

"Violations of law are the antithesis of the public good," according 
to an IRS document.

"This sort of exemplifies the conflict, the dichotomy, between state 
and federal law," Fayne said. "While this organization may have the 
best of intentions, the federal government isn't going to support its 
endeavor."

Other lawsuits over the distribution of licenses to grow and sell 
medical marijuana are expected.

Former Gov. Pat Quinn left office without announcing who could grow 
and sell Illinois pot despite his administration producing a list of 
businesses recommended to land the coveted licenses to grow and sell 
medical marijuana.

Gov. Bruce Rauner reviewed those recommendations and issued the 
licenses earlier this month.
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MAP posted-by: Jay Bergstrom