Chicago Suit Claims Cannabis Monopoly Violates Antitrust

The market for legal marijuana in Illinois is monopolized by the “Chicago Cartel,” according to a federal antitrust lawsuit filed Monday by a group called True Social Equity in Cannabis.

As a result, a pound of legal marijuana in 2022 sells for more than $4,000 in Illinois, compared with $300 in California, according to the suit.

“The ‘Chicago Cartel’ can control prices in these markets because supply and demand can be reasonably predicted and forecast by the ‘Chicago Cartel’ members, who share price information and collude to charge monopolist prices,” according to the complaint from attorney Mark Lavery.

The lawsuit alleges that the cartel dates back to a partnership in 2014 between Mike McClain, co-defendant in Mike Madigan’s corruption case, former U.S. Capitol Police Chief Terrance Gainer and Green Thumb Industries CEO Benjamin Kovler, heir to the Jim Beam alcohol fortune.

That partnership evolved into a larger group, which includes Akerna, a publicly traded cannabis software company controlled by the Pritzker family, according to the suit. 

“Akerna is a company that provides technology to ‘Chicago Cartel’ members to track prices, supply and demand in these state-protected marijuana markets,” Lavery said in the nine-page complaint.

The lawsuit alleges the cartel also includes multi-state cannabis operators Verano Holdings, a Chicago-based firm that is publicly listed in Canada, and Surterra Holdings, Beau Wrigley’s cannabis company, which is also known as Parallel and is facing a separate lawsuit from investors who claim it is a Ponzi scheme.

“Green Thumb, Verano and Surterra have worked together for years to keep marijuana prices high in Illinois in part through sharing supply, demand and price information,” according to Lavery.