As Edna Patterson recovered from being shot a second time, she started searching for a job and came across an offer on Craigslist that sounded too good to be true.
“Interested in a quick $2,000?” read an ad placed by Canna Zoned MLS, a Michigan firm seeking people who meet the social equity criteria for cannabis permits in Illinois and who could be placed on applications.
To earn that initial payment, the ad asked respondents to provide certain private records to prove they qualified: tax and medical documents, pay stubs and a driver’s license, among other things. It promised another $20,000 to anyone awarded one of the permits — without mentioning the 51% stake social equity applicants are required to hold in a company to score a license.
Patterson, 26, who lives on Chicago’s East Side, said she initially “thought it was a scam” when she came across the ad in February. In the end, she said she was lured by the promise of easy money and encouraged to follow through by Amanda Kilroe, an attorney for Canna Zoned.
Patterson sent documents proving she was a victim of gun violence, a new way to earn social equity status in an upcoming licensing round for 55 pot shops. She later received an electronic transfer of $2,000.
But she also signed a contract that could potentially make her a front person. She would be listed as a company’s majority owner on an application but would then have to sell her lucrative share for just $1 if a license is awarded, the contract states.
When she signed the contract, she said she was just excited to potentially earn the additional $20,000 and get a job at the dispensary. Told a license could be worth millions of dollars, she said she’s not sure what to think now.
“I don’t so much feel cheated, but I don’t really know,” she said. “... I don’t know how special [a license] is to them, I don’t know how valuable this is.”
She added: “I’m just a name to them.”
‘Self-proclaimed kings of cannabis’
Canna Zoned is involved in selling and leasing real estate for weed businesses. It was organized in 2020 by attorney Benjamin Bayram, according to the Michigan Department of Licensing and Regulatory Affairs.
A video on the firm’s website frames its team as the “self-proclaimed kings of cannabis,” claiming the company and its partners hold “more municipal licenses than any other entity in the state of Michigan.”
Patterson signed her deal with Chicago Retail 6 LLC, which is described in the contract as an Illinois company with an address in Sylvan Lake, Michigan. Canna Zoned has that same address in suburban Detroit.
State records show there are 14 other Chicago Retail companies in Illinois. Under the state’s new licensing rules, entities and individuals can only submit a single dispensary application.
Kilroe said Canna Zoned had halted its efforts to get into the state’s weed business when she was reached by the Sun-Times on March 13. She claimed the firm “didn’t end up moving forward” with any of the respondents to the ad.
“We didn’t enter the game in Illinois,” she said.
The next day, however, five of the Chicago Retail companies were incorporated, all of which share Canna Zoned’s address in Michigan. Then, a day later, Patterson said Kilroe reached out to her and offered a $400 “referral bonus” for connecting other qualifying social equity applicants to the firm.
That appeal came after the application deadline to qualify for a lottery for the next 55 licenses was extended for the fourth time, from March 10 to April 21.
The contract Patterson signed lists Jeffrey Yatooma as the authorized agent. He shares the same address as Canna Zoned and is the brother of Gregory Yatooma, who Michigan State Bar records show is Bayram’s law partner.
The Detroit News reported last month that MSY Capital Partners, a cannabis real estate firm run by the Yatooma family, gave a $75,000 loan to Michigan’s embattled former house speaker in April 2019 after the marijuana licensing board he led voted to “prequalify” a company Gregory Yatooma invested in for a permit. The news came as a federal grand jury probed whether bribes impacted the board’s decisions, according to the paper.
Jeffrey Yatooma has been connected to both MSY Capital Partners and Cannabis Property Brokers, companies headquartered at the same address as the law firm his brother and Bayram work for. In a biography previously posted online, Jeffrey Yatooma is described as “a pioneer of cannabis real estate development” who had been awarded 84 weed licenses in Michigan and who was expanding to Illinois.
Kilroe, Bayram and Jeffrey Yatooma didn’t respond to additional requests for comment. The ad was taken down on Friday.
‘It’s unfair, but it’s capitalism’
The legalization of recreational marijuana in Illinois has been marred by criticism the state isn’t doing enough to ensure people of color are getting a leg up in the licensing process and aren’t being exploited.
After litigation delayed the first lottery for recreational dispensary licenses for nearly two years, state regulators overhauled the application process to lower the barrier for entry.
Under the new system, groups initially submit a $250 fee and an online application with basic information, including the name of the company and its principal officers. All the applicants are then entered into a lottery that will select 55 groups, which then have to prove their social equity status to get a nontransferrable conditional license.
It isn’t until that phase that groups are tasked with submitting an extensive application showing their ownership structure and ultimately passing a state inspection to earn a permanent license to open. At that point, ownership of a license could be transferred.
Cannabis industry attorney Mike Goldberg insisted a contract like the one Patterson signed would “never pass” the scrutiny of the Illinois Department of Financial and Professional Regulation, the agency that issues licenses.
Paul Isaac, an IDFPR spokesperson, didn’t respond to specific questions about Canna Zoned, but he noted that “all licenses must proceed through the department’s change of ownership process” in order for majority ownership to be transferred.
State Rep. La Shawn Ford, a West Side Democrat who has sponsored cannabis legislation, said the state needs to devise more safeguards.
“We actually need to be more keen on public policy when we write it to avoid this type of opportunity allowing vultures into our state,” Ford said. “It is unfair, but it’s capitalism, and that’s just the fact.”
Still, he added that state officials can’t be too restrictive in trying to grow a multibillion dollar industry.
“We’ve gotta bring the money in,” he said.
That was Patterson’s only motivation when she signed the contract with Canna Zoned.
Since being shot in the hand in July, she said she hasn’t worked and was just looking to get back on her feet. She said she still hopes her name is drawn in the lottery so she can get the easy cash.
“If they don’t get picked, then I don’t care,” she said of Canna Zoned. “If they get picked, I want to make sure they keep their end of the deal.”
