Marijuana dispensary in former Rainforest Cafe won flip-flop from state regulators, but remains on hold as one man fights against it

The former Rainforest Cafe in Chicago once featured a costumed frog named Cha Cha selling beef lava nachos. Plans now call for a new business on the site to instead have budtenders serving marijuana with names such as Bionic Cheetah and Hood Candyz. But for the second time, the transition of the abandoned restaurant at 605 N. Clark St. into a cannabis store has run into problems — despite an about-face from state regulators who once rejected the proposal. The holdup comes from one resident fighting against what he characterizes as an improper partnership in which social equity cannabis license holder Bio-Pharm LLC, is acting as a front for an established multistate company, Progressive Treatment Solutions, or PTS. In the meantime, no work has been done on the site, and the original plans to open this year have gone by the wayside. The delay reflects uncertainty over the deal caused by Robert Brown, who lives in the River North neighborhood that he says has become the city’s unofficial weed district, with four pot shops already operating within a few blocks of each other. While Brown has argued that the partnership is invalid, his legal argument rests on a narrow procedural problem that he says is representative of the broader issue. Brown filed suit in Cook County Circuit Court, claiming that the city Zoning Board of Appeals approval of a special-use permit last year for the shop was illegal, because a key Bio-Pharm executive on the application failed to attend the hearing. A judge recently threw out the suit on technical grounds, but gave Brown another chance to file suit if he can show he will be adversely affected by the shop. Brown believes the store will drive up crime and lower property values. But he is fighting a lonely fight. The local alderman, Brendan Reilly, had introduced legislation to allow pot sales downtown, where they had been banned under Mayor Lori Lightfoot. River North Residents Association Director Emeritus Brian Israel said residents previously opposed the pot shops, fearing crime and loitering pot smokers ― but since other stores have opened in the area, those concerns haven’t borne out. Progressive Treatment Solutions Corp. ran into problems once before trying to open at the site. State regulators rejected their request, because only designated social equity businesses are allowed to operate with 1,500 feet of other shops. The former Rainforest Cafe in River North on Oct. 1, 2023. So PTS formed a partnership with Bio-Pharm, LLC a startup that won a conditional social equity license, through a management agreement under new state rules. But economic disclosures showed that PTS was paying all the consultants’ bills prior to the zoning hearing, including $25,000 for an architect, and $5,000 per month each for attorney Mara Georges and Resolute PA public affairs. PTS, located in Palatine, is a multistate cannabis company with ownership led by David Flood, a member of the family that runs Flood Brothers waste management, and whose marketing director is listed online as Patrick Flood. Its CEO is former CTA board Chairman Terry Peterson. It operates a cannabis growing facility in East St. Louis, and five Consume dispensaries in Illinois. Bio-Pharm officials said they qualify as a social equity licensee because its majority owner and manager, Michael Munroe Jr., had a marijuana arrest in 1972. His father started the Pickens-Kane Moving & Storage Co. in Chicago. His son Kevin Munroe is chief operating officer of Bio-Pharm. But Michael Munroe Jr. never showed up for questioning at the community hearing or the zoning board meeting on the proposed weed shop, as required by the board’s own rules. Initially, the Illinois Department of Financial and Professional Regulation denied the request for the joint operation, according to emails Brown acquired under the Freedom of Information Act. The state agency disclosed the information only after the Illinois attorney general’s office ruled that the agency had improperly denied Brown’s request by trying to claim that emails from the agency relating to a license application were exempt from disclosure. “This … application for adult use licensure cannot be approved as submitted,” Vaughn Bentley, state deputy director of cannabis control, wrote in January of this year. He noted that an operating license may only be issued to the entity that won the original conditional social equity license, in this case Bio-Pharm “alone”, he underlined, not PTS. In response to questions from the Tribune about the matter, the department also noted that a court ruling has held that conditional licenses may not be sold or transferred and does not allow management agreements that have the effect of changing ownership. But by March, after further communications, Bentley had changed his mind. “At this time I feel comfortable approving the application with full licensure to follow an inspection,” he wrote, without explanation. State regulators refused to elaborate, again citing state law that prohibits the release of information about state cannabis applications and supporting documents. They referred the Tribune to an overview of the licensing process and updated guidance for management service agreements. In addition, Bio-Pharm was issued its conditional license in July 2022, and had 180 days to open under state law. It was granted an additional 180 days extension, and would have had to show a “hardship” as to why it couldn’t secure a location in that time, which Brown argues should also disqualify them. At a community hearing on the proposal in 2022, all the area residents who spoke opposed the idea. At the zoning board hearing in November of last year, Jay Ceithaml, a River North resident, predicted it would be a traffic “nightmare.” But medical marijuana patient and nearby resident Matt Matamuro testified that the empty storefront, across from the Rock ’n’ Roll McDonalds, attracts people loitering at all hours, while the weed shop would have security guards around the clock. “We have 200 bars … but adding another dispensary is suddenly something we have to come and talk for?” he said. Bio-Pharm and PTS officials did not return repeated requests for comment, and Brown did not want to be quoted for the story. Their zoning attorney, Georges, told the Tribune only, “Bio-Pharm/PTS anticipate beginning soon on development of the site,” but could not say when that may happen. When state lawmakers expanded the number of recreational marijuana licenses, they gave preference for licenses to “social equity” applicants, generally defined as those with low-level marijuana arrests or those from areas of high poverty and crime. The law was meant to add diversity to the cannabis industry in Illinois, which is almost exclusively owned by wealthy white males, though minorities were disproportionately imprisoned for cannabis offenses. The state has awarded nearly 200 social equity licenses, but few have opened, mainly because owners have extreme difficulties getting financing for a business that remains illegal under federal law. Congress is considering a bill known as “SAFER” that would allow federally licensed banks to work with cannabis businesses. rmccoppin@chicagotribune.com