Crain's Chicago Business, December 4, 2023 by crainschicago

CHICAGOBUSINESS.COM I DECEMBER 4, 2023

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GEOFFREY BLACK

As new pot shops finally open and lift sales in the state, all eyes are on Washington for tax relief that could boost industry fortunes I PAGE 6

Craft brewing scene faces a steep cliff Illinois has lost 10% of its craft breweries since last year, and it’s likely to get worse this winter Illinois’ craft beer industry is being ravaged by the ripple effects of the pandemic. Ten percent of the state’s breweries have permanently closed in less than two years. Craft breweries have not seen traffic return to their taprooms like they hoped. That’s bad news for an industry that made 70% of its revenue from taprooms pre-pandemic. Illinois started 2022 with 302 craft breweries. Thirty-one have closed since, said Ray Stout,

executive director of the Illinois Craft Brewers Guild. The most recently announced casualty, Metropolitan Brewing, will add to that number when it shutters its Avondale taproom this month. The impact of the closures reaches beyond a bar’s beer list. Craft beer is a $2.8 billion industry in Illinois, according to the Brewers Association trade group. Stout said the industry directly employs about 6,000 people in the state and contributes to another 17,000 jobs up and down the supply chain. More closures are expected

this winter, when business typically slows down at breweries. The industry has reached the cliff it has warned about for the last three years. “We are really seeing the shakeout from the pandemic now,” Stout said. “People are just hanging on as much as they can.” Consumer behavior has changed since 2020. People go out less or go to fewer places when they do, brewery owners say. The problem isn’t just in taprooms. Craft beer distribution —

COURTESY OF METROPOLITAN BREWING

By Ally Marotti

See BREWING on Page 14

DAN McGRATH It’s easy to overlook what a noxious dumpster fire the Chicago Bulls have become. PAGE 2

CRAIN’S LIST Check out our annual ranking of the Chicago area’s largest cannabis companies. PAGE 9

CNA Financial looks to shed part of Loop HQ The insurance company has put a portion of its workspace up for sublease By Danny Ecker

CNA Financial has joined the herd of companies trying to shrink their offices as the remote work movement keeps hampering demand for workspace downtown. The Chicago-based insurer is offering nearly 50,000 square feet across two floors at its 151 N. Franklin St. headquarters for sublease, according to a marketing flyer. The space represents about 17% of CNA’s footprint at the 35-story tower, where it has been the anchor tenant since the building was completed in 2018. The offering adds more available space to a downtown office market at a time when landlords can ill afford more competition. Office vacancy in the central business district reached a record-high 23.7% at the

end of the third quarter, driven up by a trend of companies slashing their office footprints as they embrace the rise of remote work that took hold during the COVID-19 pandemic. More companies have been pressing employees to work from the office more frequently in recent months with the end of the public health crisis. But it’s still not clear whether that will slow the spaceshedding movement. In addition to many tenants signing leases for far less space than they had before, sublease listings continue to flood the market with move-in-ready space. Some of that is proving to be compelling for companies that want to upgrade their workspace without having to spend heavily to build it out from scratch. There are about 7.9 million square

feet of downtown offices available for sublease, up from 6.7 million square feet a year ago and 3.3 million square feet when the pandemic began, according to data from brokerage CBRE.

Competition It’s unclear what prompted CNA to try to shed two floors at its headquarters, and a spokeswoman for the company declined to comment. The offering on the building’s 10th and 11th floors comes with a lease that runs through May of 2035, according to the flyer from Jones Lang LaSalle, which is marketing the space on behalf of CNA. The floors combined include 320 workstations, the flyer said. CNA could find some takers for its space, if recent leasing trends are any indication. As they try to

encourage employees to show up rather than work remotely, companies have gravitated toward offices in newer and recently updated buildings. Vacancy at top-tier, or Class A, office buildings downtown such as 151 N. Franklin St. has only ticked up to 19.2% from 18.4% over the past two years, while Class B office vacancy jumped over that span to 27.9% from 21.6%, CBRE data shows. Yet CNA also has competition for prospective tenants within its own building. The Franklin Street tower’s second-largest tenant, social media giant Meta, put five floors totaling 115,000 square feet up for sublease earlier this year. Other recent additions to the crop of offices available for sublease include more than 41,000 square feet at 550 W. Van Buren St. from Huron Consulting Group and nearly 47,000 square feet

from third-party logistics provider MoLo Solutions at 167 N. Green St. in the Fulton Market District, according to marketing materials for the listings. CNA’s lease at 151 N. Franklin St. helped kick off construction of the 807,355-square-foot tower for Chicago developer John Buck. The company relocated its employees to the building in 2018 from its longtime home at 333 S. Wabash Ave., commonly known as “Big Red” for the building’s color. CNA reported $838 million in net income during the first nine months of the year, up from $443 million during the same period in 2022, according to a regulatory filing. The company had 6,100 employees as of the end of 2022, according to its most recent annual report. JLL’s Scott Merz and Belle Spinell are marketing CNA’s space for sublease.

DAN MCGRATH ON THE BUSINESS OF SPORTS

The Chicago Bulls, our very own secret dumpster fire

quarter century has passed since Michael Jordan shook Utah’s Bryon Russell (by whatever means necessary) and knocked down the shot (as you knew he would) to give the Chicago Bulls their sixth NBA championship. Months later, Mike was off to join the car pool, then the Washington Wizards, then the Charlotte Bobcats/Hornets in the ownership suite. A statue of him guards the entrance to the United Center, his No. 23 hangs from the rafters, and he still pops up in the Dan occasional TV McGrath commercial if Peyton Manning or Charles Barkley is otherwise occupied. But to Bulls fans, Jordan is merely a memory. To ownership, he’s a gift that keeps on giving. He made the Bulls matter. The Chet Walker/Bob Love/Dick Motta edition caught Chicago’s eye back in the ‘70s, appealing to our self-image as gritty underdogs. Norm Van Lier and Artis Gilmore led a brief renaissance a few years later, with Gilmore fortuitously dispatched here after a merger shuttered the late and lamented American Basketball Association. Otherwise, Bulls tickets were as plentiful as potholes around these parts — until Jordan. While the show he put on created a demand unrivaled in the history of a sports-loving city, to some it was ephemeral: Chicago is a Michael Jordan town, not a basketball town.

Jordan may have been the lure, but the attraction — the high-flying, gravity-defying, often artistic NBA game itself — turned out to be the hook. The fans, see, have kept coming post-Jordan, even though the on-court product is rarely more than mediocre and, in the case of this season, downright inept. Amid never-ending fascination with the Bears, the Cubs’ splashy managerial hire, the Jason Benetti saga and another round of tawdry Blackhawks doings, it’s easy to overlook what a noxious dumpster fire the Bulls have become. They don’t play hard, well or together, a recipe for disaster resulting in the NBA’s second-worst record, with not so much as a two-game winning streak and no relief in sight on a roster of mismatched parts. And yet, they are eighth in league attendance, playing to 19,355 fans per night, 92.5% of their building’s 20,917 capacity. Don’t these people have something better to do? Since “franchise player” Zach LaVine suggested he might be better off elsewhere, the Bulls are 2-7, so dispirited that the national pundits are cracking wise and the ever-upbeat Stacey King is lamenting their indifference to defense. LaVine’s “franchise player” tag merits qualification: He’s paid like one at $40 million, after lobbying hard for a “max” contract. Does he play like one? No. He has been in one playoff series over his career. The true test of greatness is, does he make his teammates better? There is nothing to suggest LaVine does, either through skill (Magic Johnson) or will (Mike Jordan). LaVine is not the only rogue in

Correction ◗ The Nov. 27 editorial “Big Ten responds differently to Northwestern,

Michigan scandals” incorrectly reported the length of time that Dave Braun — who replaced Pat Fitzgerald as head football coach at Northwestern University — has been with the school’s football program. He joined the program in January 2023. 2 | CRAIN’S CHICAGO BUSINESS | DECEMBER 4, 2023

the Bulls’ gallery, but he’s a convenient scapegoat in a pay-for-performance profession. The pay is there; the performance, not so much. And now he wants out, assuming the Bulls can find a taker for his unwieldy contract and his me-first game. But it’s best to assume nothing with these Bulls. They’ve been aimless and drifting since Tom Thibodeau’s abrasive nature wore thin and got him banished in 2015 despite a 60-win season, four straight playoff appearances and a .647 winning percentage. It’s likely there would have been more had Derrick Rose not blown out his knee and become human. What’s to suggest Executive Vice

President of Basketball Operations Arturas Karnisovas — let that roll off the tongue — and General Manager Marc Eversley have a clue about fixing things? Save for the DeMar DeRozan acquisition, their personnel moves have been weak tea, almost enough to make the much-maligned Gar-Pax Era seem like the good old days. And there’s not much on the roster to command prospects or draft picks when the inevitable rebuild begins. If LaVine or DeRozan is your best player, you are not a championship contender. Left to make sense of all this is Billy Donovan, a pedigreed coach who has outdone more storied contemporaries such as Rick

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Pitino and John Calipari by succeeding at the pro level, in Oklahoma City, after a college run that featured two national championships at Florida. Unlike Thibodeau, Donovan keeps his true feelings to himself as he awaits the ax, even if he comes off sounding like Matt Nagy in resorting to empty bromides to mask his frustration. He knows. The Bulls should be a majormarket magnet. Instead, they are clueless. Much like the White Sox. Same problems, same owner. Just sayin’. Crain’s contributor Dan McGrath is president of Leo High School in Chicago and a former Chicago Tribune sports editor.

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Reschke eyes landmark for hotel conversion The Chicago developer is in talks to add the historic Jewelers Building to his list of big bets on downtown’s post-pandemic future

DENNIS RODKIN

By Danny Ecker

Inherent L3C’s Tim Swanson, left, in hat, supervised delivery of a factory-built “micro-house” to a West Loop parking lot.

‘Micro-houses’ pitched for migrants, homeless people A key advantage one of these 80-square-foot, factory-built units would have over a tent, builder Tim Swanson says, is ‘it looks like a house and acts like a house’ I By Dennis Rodkin

company that is putting factory-built affordable homes in Chicago neighborhoods has now rolled out its proposed solution to housing migrants and homeless people: 80-square-foot “micro-houses” it can build in its North Lawndale factory. Tim Swanson, the architect who founded Inherent L3C, is urging them to instead consider micro-houses for at least some of them. “It looks like a house and acts like a house,” said Swanson. “It’s See HOMES on Page 14

“This is something worth looking at to help the migrants now and we could utilize it again.” — Ald. Walter Burnett, 27th

Chicago developer Mike Reschke is in talks to buy a landmark office building overlooking the Chicago River and convert at least part of it into a hotel. Reschke’s Prime Group real estate firm is working on a deal to purchase the distressed, historic Jewelers Building at 35 E. Wacker Drive, according to sources familiar with the property. The developer would acquire the 40-story tower amid an ongoing foreclosure lawsuit recently filed by a venture of Boston-based lender John Hancock Life Insurance, which alleged the property’s longtime owner failed to pay off its mortgage when it matured over the summer. It’s unclear how close Reschke is to completing the purchase, and negotiations could fall apart. But people familiar with the matter said his firm is mulling a plan to turn a portion of the building into a hotel amid flagging demand for office space in the city and a downtown hospitality market making a comeback from the COVID-19 pandemic. The building stands to add to a list of high-profile bets Reschke is making on the city’s urban core, wagering that it will reclaim its vitality as effects of the public health crisis wane. His biggest move to date is in partnership with Chicago-based Capri Investment Group and tech giant Google, which is poised to transform the dilapidated James R. Thomp-

35 E. Wacker Drive I COSTAR GROUP PHOTO

son Center into a modern office building in the heart of the Loop. Reschke is also known for converting vintage office space into hotels: He turned most of a historic building at LaSalle and Adams streets into the 610-room JW Marriott hotel more than a decade ago; transformed a landmark building at 11 S. LaSalle St. into a high-end Residence Inn a few years later; and more recently redeveloped five floors above the JW Marriott into another luxury inn dubbed the LaSalle Hotel. Prime Group is now working on a nearly $300 million plan to convert connected former BMO Harris Bank office buildings at 111 W. Monroe St. into a combination of apartments and a See LANDMARK on Page 14

How Advocate’s co-CEO is tackling health equity, staffing By Caroline Hudson, Modern Healthcare

Advocate Health co-CEO Gene Woods has a big year ahead. Nearly a year after Atrium Health combined with Advocate Aurora, Woods is looking for more ways to solidify the $27 billion system as a powerhouse player. Advocate is building a medical school and innovation district in its headquarters city of Charlotte, North Carolina. Centers for health equity and clinical trials are also in the pipeline. Woods, who released a book detailing his experiences as a health care executive, will take

over next year as the sole CEO when former Advocate Aurora CEO Jim Skogsbergh retires as co-CEO. In an interview, Woods spoke about Advocate’s future and how the health system can tackle workforce challenges and use partnerships to improve care delivery. The interview has been edited for length and clarity. You have some big projects coming up next year, including opening a health equity institute. What is the status of those projects? We’re looking at what does equity 2.0 look like? This coming year, we’ll be launching the na-

tional center for health equity. It will be located in Milwaukee, but it will serve the whole system. We intend for it to be the largest repository of best-practice interventions for reducing disparities. It’ll have a big focus on research. So, the idea of engaging community, building trust, and then looking at ways to do research on the latest clinical discoveries [to avoid] inequities in research. We’re finalizing construction plans. We haven’t exactly announced the location yet, but [we will] sometime likely towards mid-year 2024. There will be a tremendous amount of community involvement. We started off by doing

ADVOCATE HEALTH

Centers for health equity and clinical trials are in the pipeline for 2024

Gene Woods

deep listening in terms of what the community needed and what we’re realizing is there’s a whole host of needs. Something that popped up to the top, for example, is this idea of violence. We’ve

come to think as violence as a disease, and we’ve got some wonderful programs throughout the system on trauma-informed care. See ADVOCATE on Page 16 DECEMBER 4, 2023 | CRAIN’S CHICAGO BUSINESS | 3

Former Motorola Mobility campus hits the market Innovation Park Lake County will test investor appetite for corporate campuses in the suburbs that have been updated with modern amenities By Danny Ecker

The Maryland real estate firm that spent almost $50 million buying and turning the former Motorola Mobility campus in Libertyville into a multitenant office and research hub is looking to cash out. Rockville, Md.-based Beco Management has hired real estate services firm Eastdil Secured to sell Innovation Park Lake County, a 1 million-square-foot campus at 1910 Innovation Way in north suburban Libertyville, according to a marketing flyer. Beco has owned the 83-acre property since acquiring it in 2014 from Motorola Mobility, which developed the complex as a cell phone plant in the early 1990s. The offering will reveal how much investors crave corporate campuses in the suburbs that have been revamped with modern amenities and new tenants. Such properties look attractive to real estate firms if they come with stable cash flow from long-term leases with high-credit tenants. But Beco will have to overcome higher interest rates and a tight lending environment, the biggest reasons commercial property sales have plummeted nationwide this year. A sale against that backdrop could be a point of validation for developers that have revived other former corporate campuses in the suburbs or are eyeing similar projects. No asking price is listed for the

Innovation Park property, which includes four attached buildings and is 71% leased, according to marketing materials. Beco laid out an ambitious vision for the vacant complex when it paid $9.5 million for it in 2014, then plowed nearly $40 million more into renovations. The investments started to pay off when Beco inked big leases with a group of tenants such as Valent BioSciences, Medline Industries and Bristol Meyers Squibb. Those three tenants now collectively account for 42% of the property’s rentable space, according to Eastdil.

Easing investor burden While offices have fallen out of favor with some investors given the remote-work movement weakening demand and record-high vacancy, Eastdil is highlighting a range of in-person uses at the property such as research and development, manufacturing, testing facilities and lab space. The brokerage also is playing up the in-place cash flow at the complex, which has a weighted average lease term of just more than nine years, a measure of tenants’ remaining lease commitments. Tenants collectively are on the hook for almost $70 million in contractual base rent, according to the flyer. To help ease investors’ burden of finding a lender to back them in an acquisition, Beco is willing to provide so-called “stapled financing,” meaning it would serve as

Innovation Park Lake County in Libertyville I COSTAR GROUP

the lender for a prospective buyer. Such offerings have become common over the past year, particularly among banks that have mortgages tied to office buildings with severely diminished values. Beco has no debt on the Innovation Park property, according to a person familiar with the offering. A spokeswoman for Beco did not respond to a request for comment. Some abandoned suburban corporate campuses have gained traction with new tenants after investors modernized them. Ace Hardware inked a massive lease last year to move its headquarters to the former McDonald’s

campus in Oak Brook, which was purchased and revamped by a venture of billionaire hair-care mogul John Paul DeJoria. In Hoffman Estates, a New Jersey developer has converted part of the former AT&T campus into a mixed-use property dubbed Bell Works Chicagoland that has lured a mix of new office tenants.

2012 Google deal Before interest rates started rising last year, a New York real estate firm paid $190 million for the 164-acre Kemper Lakes Business Center in Lake Zurich, the redeveloped former Kemper Insurance headquarters campus.

That marked the highest price paid for a suburban Chicago office property in 17 years. Motorola Mobility’s run at the Libertyville campus began to wind down after the company was acquired in 2012 by Google, which proceeded to sign a massive lease at the Merchandise Mart downtown with a plan to move around 2,200 Motorola employees there. In the years since, Motorola has dramatically reduced its presence there and subleased parts of it. Eastdil’s Bryan Rosenberg and David Caprile are marketing Innovation Park Lake County for Beco.

Consumer Financial Protection Bureau fines Enova $15 million By Mark Weinraub

The U.S. Consumer Financial Protection Bureau on Nov. 15 fined online consumer lender Enova International $15 million for activity that included withdrawing funds from customers’ bank accounts without their permission. Enova’s actions affected more than 111,000 customers, the bureau said. It was the second CFPB action against the Chicago-based company in less than five years. In addition to the fine, it banned the company from offering consumer loans that must be repaid within 45 days for the next seven years. It also ordered Enova to pay back affected customers and to tie executive pay to compliance with consumer financial protection laws. “Enova decided to keep flouting the law after it was caught taking advantage of its custom4 | CRAIN’S CHICAGO BUSINESS | DECEMBER 4, 2023

ers, and violated a law enforcement order,” CFPB Director Rohit Chopra said in a statement. In addition to the unauthorized withdrawals, the CFPB said that Enova canceled loan extensions, misrepresented due dates for certain loan payments and set up recurring electronic fund transfers without providing customers copies of signed authorizations. Without admitting or denying wrongdoing, Enova accepted the fines and other penalties under a consent order resolving a CFPB enforcement proceeding.

Technical, processing errors Enova said it stopped offering the short-term single payment payday loans in 2022 and that its remediation to customers totaled about $3.6 million in refunds and account waivers. The company said in a statement that the settlement will not have a material effect on its oper-

ations. According to the CFPB’s consent order, Enova represented to the agency that it already has repaid a total of $3.4 million to customers for improperly debiting accounts after paying so-called lead generators for information about those accounts, and more than $1 million for problems with loan extensions. Enova, which said it selfreported most of the issues, blamed the problems on unintentional technical and processing errors that have been corrected. “We served millions of customers and processed tens of millions of transactions during the period the CFPB selected,” Ranning Li, president of consumer lending at Enova, said in the statement. “While the items identified in this order represent a small fraction of our customers and transactions, we remain committed to treating customers fairly and enhancing business

GETTY IMAGES

The agency said the online consumer lender improperly withdrew funds from customer accounts and canceled loan extensions, among other actions

Without admitting or denying wrongdoing, Enova accepted the fines and other penalties under a consent order resolving a CFPB enforcement proceeding.

practices to reduce errors and address issues promptly.” In 2019, Enova paid a $3.2 million penalty to the Consumer Financial Protection Bureau for deducting loan repayments from consumer accounts without authorization. Shares of Enova were down about 0.1% at $41.99 on Nov. 15 after sinking to a low of $41.28 earlier in the day. The company’s

stock has risen 7.8% so far this year but has fallen sharply from the all-time high of $58.64 hit in July. Earlier this year, Enova said it was contemplating “strategic alternatives” that could include potential acquisitions combined with dispositions of businesses, as the company’s board and management deemed its stock undervalued by the market.

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You can help update Chicago’s decades-old community map By Dennis Rodkin

On the long-established official map of Chicago, there’s no Wicker Park, Pilsen or Bronzeville, but a University of Chicago professor has rolled out a project that might change that. The city maintains a map of 77 community areas, 75 of them mapped a century ago by a team of sociologists who were also at the Hyde Park school. The two later additions were O’Hare, annexed by the city in the mid-1950s, and Edgewater, split off from Uptown in 1980. “The sociologists chose names that didn’t necessarily resonate with the people who lived there,” said Emily Talen, a U of C professor of urbanism. “A good example (on the map) is New City. The locals all called it Back of the Yards,” and still do, although the Union Stockyards have been closed for half a century. Last week, Talen launched the Chicago Neighborhood Project, an online survey where participants can offer up what they consider the name and boundaries of their neighborhood. A neighborhood, Talen said, “is a place that has a strong identity. You know whether you’re in it or not, and you have some kind of collective life, something that pulls people together.” Lincoln Square, she said, illustrates this well: There’s a strong feeling of community that anchors around the inter-

section of Lincoln, Western and Lawrence avenues, with shopping, Welles Park, the Sulzer public library, the Old Town School of Folk Music and CTA Brown Line stops all nearby. And while Lincoln Square is one of the 77 areas named on the map, other places with an equally strong sense of community aren’t. Wicker Park is part of West Town, Pilsen is in the Lower West Side and Bronzeville is an overlay across Grand Boulevard, Douglas and Oakland.

Better reflection The 77 names on the map are called “community areas,” distinct from “neighborhoods.” But their dominance persists in such things as the Chicago Association of Realtors’ monthly reports of market data and the Chicago Metropolitan Agency for Planning’s Community Data Snapshots that profile an area’s transportation, employment and other assets. “Wouldn’t it be nice,” Talen said, if these maps “better reflected what people call their neighborhoods?” The community areas contain about 35,000 people each, she said. “That’s way more than a neighborhood. City planning theory would put a neighborhood max at 5,000.” When people “have a more local sense of where they are and what matters, they care more about what happens to it,” said Talen, who lives in a section of Lincoln Park she’d call Sheffield if it were up to her.

“They care about whether the trash gets picked up, if there are too many homeless people who aren’t being looked after, if that elderly person needs help. They care if there are rats.” About 1,500 people responded to the survey by Nov. 14, Talen said. Funded by the Mansueto Institute for Urban Innovation at the U of C, with an amount she won’t divulge, she has bought Google ads and paid for marketing via Instagram influencers, including 77flavorschi. She’s hoping to collect enough responses to generate a map that will convince city officials to update the existing list. Because Chicago’s original neighborhood mappers didn’t have access to social media influencers, Talen said, “they beat the streets,” surveying Chicagoans in person. Led by sociologists Robert Park and Ernest Burgess, the university’s Local Community Research Committee teamed up with the city’s Department of Health, which wanted to tabulate local differences in birth and death rates across the city.

Changing populations The team interviewed several thousand Chicagoans and took into account rivers, railroad tracks and other physical boundaries. They reported identifying more than 300 neighborhoods, “but they were never adopted, or even much talked about,” Talen said. “There is no map of them that I know of.” Her research indicates Bur-

BRAD KNIGHT VIA UNSPLASH

The familiar map of 77 community areas is overdue for a refresh, says a University of Chicago professor who’s conducting an online survey

When people “have a more local sense of where they are and what matters, they care more about what happens to it,” said Emily Talen, a U of C professor of urbanism who lives in a section of Lincoln Park she’d call Sheffield if it were up to her.

In the early 1990s, Beverly resident Chris Devane began his own effort to gather Chicago neighborhood names from the people who live in them. The first edition of his map received a Library of Congress copyright in 1992, and his firm, Big Stick, now sells the third edition, as well as neighborhood maps of Boston, Milwaukee and other cities. In her classes on Chicago geography, Talen uses Devane’s maps and has had him in to speak. Her students investigate the boundaries of Chicago neighborhoods and post the results on a site called Hood Mapping. Now the Chicago Neighborhood Project is her attempt to get some of Chicago’s roughly 2.7 million residents onboard.

gess made a lot of the final decisions that winnowed the list down to 75. “It was kind of him deciding, ‘Here’s where these names will go,’ ” she said. At the time, many of Chicago’s neighborhoods were organized around ethnicity. Park and Burgess, a 1929 report on their survey said, “saw the city as an aggregation of many small territorial groupings — immigrant colonies of first, second and third settlement.” In the ensuing decades, populations flowed and changed, particularly since the latter decades of the 20th century, as Chicago evolved from an industrial city and hog butcher to the world into one whose economy runs more on professional services and international commerce.

Motorola Solutions loads up for $2B more in stock buybacks Shares are at record levels, but its stock repurchase program is nearing its limit Motorola Solutions says it will buy back another $2 billion in stock. The maker of police radios and other public-safety equipment has long been a fan of stock buybacks, which boost a company’s stock price and its per-share earnings. Since 2011, Motorola has bought back $15.4 billion of its own shares, but its current buyback program was capped at $16 billion before today’s authorization of an additional $2 billion. The company bought back $322 million in shares during the third quarter. Motorola’s stock hit a record $317.26 per share Nov. 16, bring6 | CRAIN’S CHICAGO BUSINESS | DECEMBER 4, 2023

ing its market capitalization to more than $52.6 billion. Shares topped $318 in after-hours trading, following the buyback announcement.

Cash cow The buyback extension doesn’t necessarily mean that Motorola will buy back shares at such lofty prices, says Keith Housum, an analyst at Northcoast Research in Cleveland. “I think this is just another message to shareholders that they will continue managing their capital effectively, and that includes returning some to shareholders,” he said. “They will use it opportunistically as they have done in the past. I do expect M&A to be in their near

BLOOMBERG

By John Pletz

future as well, so this just gives them the authority to strike if the shares fall.” Motorola is a cash cow. Securities Exchange Commission fil-

ings show the company generated nearly $800 million in cash during the first three quarters of 2023, up from $550 million a year earlier, on revenue of $7.1 billion.

In the third quarter, Motorola spent $322 million on share repurchases, paid out another $147 million in dividends and made $65 million in capital expenditures, but still had $910 million in cash on hand. In addition to approving more buybacks, Motorola directors raised its quarterly dividend 11% to 98 cents per share. Motorola dominates its core business of public-safety radios and dispatch equipment. Because it sells primarily to government customers, the company’s financial performance has held up better of late than many technology companies that rely more heavily on corporate customers, who have grown more cautious amid rising interest rates and fears of a recession. Motorola also has been successful in passing along higher costs to its customers.

City rolls out vending machines with naloxone to combat opioid overdoses By Jon Asplund

The city is trying a new tack to get life-saving naloxone in the hands of those who need it most. The Chicago Department of Public Health has set up five vending machines around the city stocked with naloxone, fentanyl and xylazine test strips, general hygiene kits, socks, underwear and other public health supplies, all free of charge. The machines are one piece of the city’s larger harm-reduction strategy to prevent opioid overdoses, said Sarah Richardson, the CDPH project manager responsible for the pilot program. The idea for public health vending machines began before the pandemic, but, nationwide, interest really grew during the pandemic, when other options for resources were closed, Richardson said. Vending machines, she said, serve those people who are reluctant to access these products in person, or in a brick-and-mortar location. Not only is opioid drug use a crime, she notes, but “what accom-

panies that criminalization is stigma around accessing things like naloxone and testing strips.” There are other useful items in the machines, like clothing basics and tampons and pads, and “putting all these together, saying these are all vital resources” helps to reduce stigma. With a problem like substance use disorder and overdosing, it is important to find innovative ways to provide harm reduction in a multipronged manner, she said. “In Chicago, when we think about the opioid crisis, we need to put it into context,” Richardson said. “Three to four people every day die of an overdose. That’s more than those who die from traffic crashes and homicide, combined.” “That’s what harm reduction is, meeting people where they are, loving them where they are and doing whatever we can to keep them from harm,” she said.

Response teams Vending machines are just another avenue to get things like naloxone and test strips in front of opioid users. Naloxone is available

free-of-charge at every Chicago Public Library, at City Council member offices and in other public spaces. CDPH also conducts targeted outreach in which community health workers get out into neighborhoods, hand out products, teach about their use and even respond to overdoses, Richardson said. Another CDPH program underway on the West Side is Opioid Response Teams, made up of peer recovery counselors and paramedics. After someone has survived an overdose, “they go out and find them” to provide counseling and harm reduction products, she said. The pilot effort, expected to run about a year, began a couple of weeks ago, and already 470 items have been distributed, she said. CDPH will analyze data on what’s being used and where. The machines also ask users to answer some basic questions. When someone gets something from the machine, there’s a “set of totally optional questions” asked by the machine, Richardson said, and a large proportion of people are answering those surveys.

CHICAGO DEPARTMENT OF PUBLIC HEALTH

As part of a CDPH pilot program, Chicago has set up five machines stocked with the life-saving drug and other public health supplies, all free of charge

She said that, among those who complete surveys, a majority are homeless or housing insecure and 62% have witnessed an overdose themselves. For the pilot phase of the program, the vending machines are located at: ◗ Uptown Library, 929 W. Buena Ave. ◗ Garfield Community Service Center, 10 S. Kedzie Ave. ◗ Harold Washington Library Center, 400 S. State St.

◗ 95th/Dan Ryan Red Line CTA

Station, 14 W. 95th St., in the north terminal. ◗ Roseland Community Triage Center, 200 E. 115th St. Mayor Brandon Johnson and Acting Public Health Commissioner Fikirte Wagaw publicly launched the vending machine program at a press event on Nov. 17 at the Garfield community center, where the Rush University Substance Use Team also gave a naloxone demonstration.

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DECEMBER 4, 2023 | CRAIN’S CHICAGO BUSINESS | 7

For Illinois’ cannabis industry, the roller-coaster ride continues

Ran

As new pot shops finally open and lift sales in the state, all eyes are on Washington for tax relief that could boost industry fortunes By John Pletz

Four years into Illinois’ experiment with legal recreational marijuana sales, the industry looks very different — in ways that are both good and bad. Big companies continue to face headwinds and are looking for a lifeline from Washington, while many new small companies are defying the odds and pushing ahead to open shops and cultivation facilities. After years of delay, new license holders are entering the market at a healthy clip, which is helping diversify ownership in the industry and bring down Illinois’ notoriously high prices. There are 173 pot shops in Illinois, up from 113 a year ago. State regulators think 190 could be open by the end of the year. New dispensaries are crucial to the continued growth of the legal marijuana business, which provided $452 million in tax revenue to the state in the fiscal year ended June 30. Adding new operators also is key to fulfilling promises of social equity that were at the heart of the argument to legalize recreational marijuana. Demand remains strong, but prices have declined, which is slowing overall industry revenue growth while making products cheaper for customers. Revenue growth had begun to stall in the spring before more stores opened. Through October, recreational marijuana sales statewide were up 5% from a year earlier to $1.3 billion, compared with 14% growth during the same period in 2022. The decline in revenue growth partly reflects falling marijuana prices, as well as competition from other states and cultivators having to compete to supply new stores. Beau Whitney, who heads cannabis research firm Whitney Economics in Portland, Ore., estimates combined sales of medical and recreational marijuana in Illinois will be about $1.85 billion this year. “It should be about $2.4 billion,” he says, citing litigation that delayed new licenses as the main culprit that put a lid on sales. “Slow rollout limits access (to product), which limits the number of new customers coming into the legalized market.” The number of products sold in recent months has been roughly 20% higher than a year ago. Illinois wholesale marijuana prices are now the fourth highest in the country, according to researcher Cannabis Benchmarks. The state previously had the highest pot prices in the nation. 8 | CRAIN’S CHICAGO BUSINESS | DECEMBER 4, 2023

1 Akele Parnell, CEO of Chicago-based Umi Farms | GEOFFREY BLACK

Cannabis sales stall, then rebound Monthly recreational cannabis sales in Illinois

$138.8 million

$125M $100M $75M $50M $25M 0

Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. March April May June July Aug. Sept. Oct. ’22 ’22 ’22 ’22 ’22 ’22 ’22 ’22 ’22 ’22 ’22 ’22 ’23 ’23 ’23 ’23 ’23 ’23 ’23 ’23 ’23 ’23

Cannabis products sold monthly in Illinois

3.7 million

Source: Illinois Department of Financial & Professional Regulation

Erin Johnson, Illinois’ chief regulator for cannabis, says the industry has made significant progress in the past year. “We’re proud of where the program is at,” she says. “Our market is in a good place. A year ago, there were zero social-equity applicants

open. Today we have 59. We’re not at our goal, but we have made a huge amount of progress. “I’m proud we’re selling a record number of products, which means prices are coming down. Hopefully, fewer people are going to Michigan and going to Missouri. It’s better for

consumers.” Illinois is closely watched by the industry. It’s home to Big Weed: Three of the five biggest publicly traded cannabis companies in the U.S. — Green Thumb Industries, Verano Holdings and Cresco Labs — along with PharmaCann, one of the

largest privately held marijuana businesses, are based in Chicago. Also under watch: Illinois’ experiment in social equity, which attempts to diversify the industry and undo some of the damage attributed to the war on drugs by tailoring licensing efforts to reward people from neighborhoods hit hard by violence and drug crimes, as well as those arrested for low-level marijuana possession. Illinois’ plan was praised, then criticized for being too slow and complicated. Other states, notably New York and New Jersey, also have struggled to roll out new programs with social-equity goals. And states that allowed nearly unlimited licenses, such as Michigan and Oklahoma, are seeing businesses fail. Still, funding remains the biggest challenge across the industry for established players and new entrants alike. Well-capitalized operators have launched multiple stores in Illinois. Six locations have opened under the Spark’d brand, which is affiliated with the owners of Chicago-based Dispensary 33. Six stores debuted under the Ivy Hall banner, including four affiliated with World of Weed, a dispensary chain headquartered in Washington State.

The hunt for money There are signs that more capital is becoming available, but it’s more expensive. Because marijuana is illegal at the federal level, companies can’t access traditional loans. But higher interest rates in the commercial market drive up borrowing costs for weed companies and shrink the relatively small pool of cannabis lenders and investors, who now can more easily find other, less-risky alternatives

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CRAIN'S LIST LARGEST CANNABIS COMPANIES Ranked by current local employment. e = Crain's estimate (in gray). NO. OF IL CULTIVATION CENTERS

HEADQUARTERS; YEAR FOUNDED

NO. OF STATES 2022 TOTAL REVENUE WITH OPERATIONS (MILLIONS)

Chicago 2013

$842.0

Zen Leaf; 10

Chicago 2014

$880.0

3,529

Rise; 6

Chicago 2014

$1,017.4

461 15.3%

5,448

Curaleaf; 10

New York 2010

—

Brett Novey CEO

425 -10.0%

2,333

Verilife; 7

Chicago 2014

$421.2

33 6 DISPENSARY 5001 N. Clark St., Chicago 60640

Zachary Zises Bryan Zises Founders

250 —

250

Spark'd Cannabis, Dispensary 33; 9

Chicago 2015

—

WELLNESS HOLDINGS INC. 7 ASCEND 9820 S. Ridgeland Ave., Chicago Ridge 60415

Kathleen Olivastro Regional vice president

220 33.3%

2,300

Ascend; 6

New York 2018

$405.9

HOLDINGS 8 ACREAGE 975 Rohlwing Road, Rolling Meadows 60008

Kate Nelson Senior vice president, Midwest and Northeast regions

150 e -6.8% e

1,016 1

Nature’s Care; 2

New York 2011

$237.1

VENTURES 8 4FRONT 8554 S. Commercial Ave., Chicago 60617

Brandon Mills President, Massachusetts and Illinois

150 0.0%

600

Mission Dispensaries South Chicago, Mission Dispensaries Calumet City; 2

Phoenix 2011

$118.6

Perrine Knight CEO

140 16.7%

180

Windy City Cannabis; 6

Chicago 2014

—

CANNABIST COMPANY 11 THE 4758 N. Milwaukee Ave., Chicago 60630

Nicholas Vita CEO

130 e -7.1% e

2,278 3

Cannabist; 2

New York 2012

$511.6

CANNABIS 12 REVOLUTION 1200 N. Branch St., Chicago 60642

Craig Johnson CEO Dusty Shroyer President

100 100.0%

425

Enlightened; 2

Chicago 2014

—

1937 GROUP 13 THE 7105 S. Yates Blvd., Chicago 60649

Ambrose Jackson Chairman, CEO

89 1,012.5%

Parkway Dispensary; 1

Chicago 2021

—

CANNABIS 14 OKAY 1914 W. Chicago Ave., Chicago 60622

Ameya Pawar Scott Weiner Co-owners

40 —

250

Okay Cannabis; 2

Chicago 2023

—

15 MEDMEN 1142 Lake St., Oak Park 60301

Ellen Deutsch CEO

32 128.6%

600 e

MedMen; 1

—

Culver City, Calif. 2010

—

16 NUERA 1308 W. North Ave., Chicago 60642

Bob Fitzsimmons Chairman, CEO

21 23.5%

200

nuEra; 1

Chicago 2015

—

TOP EXECUTIVE(S)

LOCAL EMPLOYEES; 1-YEAR CHANGE

TOTAL EMPLOYEES

LOCAL RETAIL DBA; NO. OF LOCAL STORES

LABS 1 CRESCO 400 W. Erie St., Chicago 60654

Charles Bachtell CEO

547 10.3%

2,500

Sunnyside; 6

2 VERANO 224 W. Hill St., Chicago 60610

George Archos Chairman, CEO

497 15.6%

3,748

THUMB INDUSTRIES 3 GREEN 325 W. Huron St., Chicago 60654

Ben Kovler CEO

481 6.9%

4 CURALEAF 344 N. Ogden Ave., Chicago 60607

Matt Darin CEO

INC. 5 PHARMACANN 190 S. LaSalle St., Chicago 60603

COMPANY

CrescoLabs.com

Verano.com

GTIGrows.com

Curaleaf.com

PharmaCann.com

Dispensary33.com

AWHoldings.com

AcreageHoldings.com

MissionDispensaries.com

CITY CANNABIS 10 WINDY 444 N. Michigan Ave., Chicago 60611 WindyCityCannabis.com

CannabistCompany.com

RevCanna.com

The1937Group.com

OkayCannabis.com

MedMen.com

nuEraCannabis.com

Research by Sophie Rodgers (sophie.rodgers@crain.com). | This list includes cannabis companies with an active license to cultivate in Illinois or operate stores in Cook, DuPage, Kane, Lake (Ill.), Lake (Ind.), McHenry or Will counties. Employment figures reflect full-time employees. NOTES: e. Crain's estimate. 1. As of February 28, 2023. 2. Formerly known as Columbia Care. 3. As of March 23, 2023.

than marijuana deals. Building out a retail location can easily require $1 million, with grow facilities costing 10 times that amount. Akele Parnell, CEO of Chicagobased Umi Farms, has opened an extraction lab in Rolling Meadows and is building out a shop in Lincoln Park that is expected to open in the spring under the name Marigrow. The company has about 10 employees. Parnell says he’s raised several million dollars and has lined up more funding for the store, which is opening in a former diner. “Once you have revenue and a location, the risk goes down and it’s easier to get capital.” But “it’s tough,” adds the industry veteran, who previously worked at a cannabis startup and as an in-house attorney for Green Thumb. “Even though Illinois is healthy, relative to other big markets, I think all the new licensees would agree it’s a lot harder than we thought it would be, even if you have experience.” Illinois legislators recently approved $40 million in loans for

new cannabis companies, but the money hasn’t yet been disbursed. Cannabis czar Johnson says the state hopes to have loan applications ready for dispensaries by the end of the year. The Illinois Department of Agriculture has provided $18 million in loans for craft growers, infusers and transporters. Johnson says 11 craft growers have opened and 16 more are under construction. A year ago, two were open. A stumbling block has been the amount of space that craft growers can operate. State law allows 5,000 square feet to start, with a maximum of 14,000 square feet over time. License holders have complained it’s hard to finance facilities under 14,000 square feet. Johnson says she plans to work with legislators to expand cultivation space. Such a measure failed in this year’s session. Even the biggest companies have tightened up on capital spending, called off mergers and acquisitions, and focused on trimming costs, looking to hang on until the industry’s fortunes improve.

“It’s been all about rationalization and cost containment,” says Morgan Paxhia of Poseidon Asset Management, a San Francisco-based fund that has been investing in the cannabis industry for a decade. “We still are not seeing much capital flow. Equity has barely returned, and most companies can’t take on any new debt. Some people are extending debt.” Cresco abandoned its $2 billion all-stock acquisition of Columbia Care. Verano called off a $413 million acquisition of Goodness Growth.

Betting on tax relief All eyes again are focused on Washington for help, but this time from bureaucrats, not legislators. President Joe Biden has directed regulators to reschedule marijuana as a less-dangerous controlled substance, which many in the industry expect to happen in the next several months. If marijuana is reduced from a Schedule 1 to a Schedule 3 drug, it would lower taxes for cannabis companies, which currently can’t

deduct the same day-to-day expenses as traditional businesses. The impact would be far greater than the banking reform legislation that the industry has been pursuing for several years. The future of the SAFER Banking law, which looked promising a few months ago, seems doubtful, given the political turmoil in the U.S. House, tempering some of the enthusiasm for industry fortunes. Stock prices got a lift in September when the Department of Health & Human Services recommended rescheduling, but have retreated a bit since then. Verano Holdings’ stock price is up 38% so far this year; Green Thumb Industries’ shares are up 21%; and Cresco Labs’ stock is down 6%. All three stocks are still down by at least half from where they were trading two years ago. Illinois joined several other states in offering some relief, allowing cannabis companies to deduct business expenses from state taxes — a move that could save them millions a year. The roller-coaster ride for public-

ly traded companies flows through to private companies. As stocks slid, valuations of private firms slumped, too. Deals such as Dispensary 33’s planned sale of two Chicago pot shops to Miami-based Ayr Wellness fell through. Just five Illinois dispensary licenses were transferred in the fiscal year ended June 30, down from 17 and 15 licenses sold in each of the previous two years, respectively, according to state records. “Rescheduling has the biggest immediate impact,” Paxhia says. “We would start to see exits again. Without it, a lot of small companies won’t make it.” Meanwhile, in Springfield, the cannabis industry is pushing for regulations to restrict the sale of competing hemp-based products, such as Delta 8. Fourteen states, including Colorado and New York, have banned Delta 8. “We have to move forward to regulating intoxicating hemp, which is a direct competitor to our social-equity licensees,” Johnson says. “I do think the Legislature has the appetite to regulate intoxicating hemp.” DECEMBER 4, 2023 | CRAIN’S CHICAGO BUSINESS | 9

W EDITORIAL

The trial of former Ald. Ed Burke is also a trial of The Chicago Way

some backscratching is occasionally in order to achieve compromise on any issue. But that’s a different thing than using one’s elected position to funnel revenue to one’s side business, as Burke stands accused of doing, or to imply that the price of getting business done at City Hall includes lining the pockets of those who have say-so over that business.

With the Lariviere revelations, the Burke trial is descending to an even more shameful depth than might have been expected.

JOHN R. BOEHM

ollowing a COVID-related hiccup or two, the trial of former 14th Ward Ald. Ed Burke is now hitting its stride, shining a glaring spotlight on some of the darkest corners of Chicago’s political world. As video and audio tapes of Burke’s dealings are played in open court, the good news, in a way, is that scandalbenumbed Chicagoans can still find it possible to be shocked by the sight and sound of a well-connected alderman wheeling and dealing for favors. One of the most troubling insights is the extent to which Burke, as the onetime head of the City Council’s most powerful clique, the Finance Committee, apparently viewed every sector of the city — including the nonprofit and philanthropic world — as a target-rich environment for payola, graft, as well as jobs for friends and relatives. One example emerged Nov. 20, when a recording of a phone call between Burke and former Field Museum President Richard Lariviere was aired for the jury, a conversation in which Lariviere apologized to Burke for having “dropped the ball” on Burke’s request to hire his goddaughter. What was revealed in the tape was the most influential man in Chicago politics — someone with certainly more staying power than any mayor elected since the Daley dynasty — allegedly shaking down the leader of one of the city’s most highprofile nonprofit institutions in order to

Ed Burke

extract a personal favor for a family friend. What was also revealed was the extent to which the leader of that nonprofit felt it necessary to accommodate this influential man’s request. What executive atop any organization in the city could risk incurring the wrath of some-

one who could effectively block any project or venture requiring city approval with a mere nod? No one reading this is naive enough to think politics isn’t, in part, a game of horse-trading. Democracy is messy, and in the give-and-take world of governing,

The current court proceedings are shaping up to be as much a trial of The Chicago Way as they are of Burke himself. But it’s worth noting that, with the Lariviere revelations, the Burke trial is descending to an even more shameful depth than might have been expected. Organizations like the Field Museum, after all, exist to enhance the life of all Chicagoans. They also burnish Chicago’s reputation as a great place to live and work, adding heft to our claims of worldclass-city status. The idea that they might also be strong-armed for one politician’s gain is disappointing, even by Windy City standards.

PERSONAL VIEW

Why this food company made a big bet on Glenview

such as the available workforce, ecently, Upside Foods anaccess to railroads and highways, nounced plans to locate and an abundant supply of reliits first commercial proable energy. But none of these duction facility in north suburthings matter if there is not an ban Glenview. As the first cultiavailable site that is ready to go. vated meat company to receive For this reason, the federal govFDA approval, this is a major ernment should encourage or inboon for Illinois’ thriving food centivize private-sector investtechnology ecosystem. The ment in site readiness. company will invest $141 mil- Dan Seals is Across the U.S., the manufacturlion and create 75 jobs. CEO of ing boom is facing a key bottleBut why did this pioneer in the Intersect neck: the availability of ready sites future of food choose to do its Illinois. for makers of electric vehicles, mimanufacturing in a suburb better known for office parks and corporate crochips, clean-energy technologies and headquarters? Many factors came into other goods critical to building a sustainplay, but a critical one was site readiness able future. Federal incentives like those — the capacity of a location to get up and offered through the Inflation Reduction running quickly. In this regard, Upside Act have supercharged demand for ready manufacturing sites, but it takes much Foods is hardly unique. I regularly meet with business leaders more than available acreage to attract from a variety of industries looking for the business. Megasites — those that are 1,000 right place to grow their companies. The acres or more — need power and water, conversation usually focuses on factors and lots of it. A single megasite might need

more than 250 megawatts of electricity, enough to power tens of thousands of homes. Moreover, climate-conscious companies increasingly expect that energy to be sustainably generated from wind, solar, nuclear or hydro. Utilities are just the start. Goods have to get out of the factory gates and onto shelves and showrooms around the world. Easy access in the form of highways, railways, runways and waterways is vital to ensuring speedy access to markets. From EV gigafactories to e-commerce distribution centers, these sites must be able to handle hundreds of heavy truckloads or train cars every day. Just as important, they must be located near a large pool of skilled, motivated workers to fill manufacturing, engineering, IT, logistics, administrative and other roles. With unemployment hovering near 50-year lows, workforce availability is a critical element in location decisions. Illinois is better positioned than most

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Chicago Business, 130 E. Randolph St., Suite 3200, Chicago, IL 60601, or email us at letters@chicagobusiness.com. Please include your full name, the city from which you’re writing and a phone number for fact-checking purposes. 10 | CRAIN’S CHICAGO BUSINESS | DECEMBER 4, 2023

when it comes to the availability of megasites. But for the U.S. to achieve the vision laid out in its industrial policies, more funds should be made available for site readiness. All the incentives in the world simply won’t matter if there aren’t sites for companies to locate in. Intersect Illinois, the business attraction arm of the state, is taking matters into its own hands by vetting sites before companies come looking. Illinois’ Department of Commerce and Economic Opportunity is also investing resources into site readiness. But current funding pales before the task at hand. Federal policies that encourage private investment in land improvements would lay the foundation — quite literally — for new companies to quickly come in and create jobs. Paired with national legislation like the IRA, CHIPS Act and the Bipartisan Infrastructure Act, such an approach would accelerate the renewal of the nation’s industrial might and creation of a sustainable, prosperous future for all.

Sound off: Send a column for the Opinion page to editor@chicagobusiness.com. Please include a phone number for verification purposes, and limit submissions to 425 words or fewer.

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PERSONAL VIEW

We need better dialogue about mental health, mass shootings

he Oct. 25 tragedy in Lewiston, Maine, the deadliest mass shooting of 2023, was yet another sobering moment in our nation’s ongoing battle with the gun violence epidemic. So was the Oct. 29 incident in Lawndale, along with another 12 mass shootings recorded across the country over Halloween weekend. In the wake of mass shootings, we are understandably desperate to make sense of what happened and identify solutions when the otherwise unthinkable has occurred, which often leads to calls for increased mental Alexa James health funding. Though it’s a is CEO of the positive sign to National see broader recAlliance on ognition of the Mental Illness importance of (NAMI) mental health, Chicago. these rinse-andrepeat conversations connecting mental health and mass shootings are not leading to fewer tragedies. This dialogue fails to acknowledge that the solutions to affect change are far more nuanced, complicated and messy. They will require putting measures in place to reduce access to and confiscate weapons that are designed to kill as many people as possible, and examining broader approaches for how we prepare law enforcement and mental health professionals. Much of my life’s work revolves around voicing the needs of those living with mental illness, so I will always stand by increased funding for the work we at the National Alliance on Mental Illness (NAMI) in Chicago and other advocates lead, but we must be able to move beyond the basic rhetoric that more mental health funding on its own will serve as a solution. It’s time we take the conversation in a different direction. For many reasons, the mental health system alone is not equipped to change the tide on this public health crisis. While there are certainly instances in which mass shooters are living with a psychiatric disorder, it’s a dangerous misconception to assume that all are — as it is to see this connection in most cases applied to perpetrators who fit a certain profile. In reality, mass shooters don’t necessarily suffer from major psychiatric disorders. In 2000-2013, only 25% of assailants had been diagnosed with one, according to a 2018 study by the FBI. When people are flagged as at-risk of committing an act of violence by friends, family or others, the psychiatrists who are often called upon to evaluate them may determine the individual is not experiencing a psychiatric disorder and therefore does not meet the criteria for intervention within the mental health system. We won’t succeed in securing a better outcome if mental health, gun policy and law enforcement

remain siloed. To ensure at-risk individuals don’t fall through the cracks, whether they are living with a mental health condition or not, we need to build an integrated strategy that enables psychiatrists to more closely coordinate with law enforcement and other riskmitigating agencies, and that encompasses increased training and resources to disrupt the cycle. Building this system would occur within the bounds of HIPAA and other privacy laws, but has enormous potential for identifying and

supporting at-risk individuals. Even still, this is not enough. We need to acknowledge the elephant in the room and have a national dialogue around assault weapons. I know this is a polarizing and deeply partisan issue, but law enforcement and mental health professionals can’t go it alone, as even they have their limitations. We need other protections in place to prevent guns from getting into the wrong hands. The data is clear: When assault weapons bans are in place, mass shootings are less frequent. Republicans and Demo-

crats from across the country need to come together to find a path to passing a ban. This public health crisis demands a federal-level approach. 2023 is on track to breaking the record for the highest number of mass shootings recorded in the United States in a single year. These tragedies are happening in every community, and we can no longer place the burden on municipalities and states whose piecemeal approaches are not equipped to comprehensively address our country’s mass shooting epidemic.

While the rise of mass shootings represents a dark chapter in our nation’s history, it’s not a chapter without hope. We are now at a crossroads for when and how to discuss mental health in relation to these tragedies. If we can engage in more nuanced conversations around this issue to better understand the complexity of what leads to mass shootings and take the first step toward building a coordinated intervention system, I’m confident that we can find the light at the end of this tunnel.

MY BENESCH “Benesch offers expert and elegant advice delivered with the sensitivity and business understanding necessary for success in implementation. They combine academic rigor with real-world smarts—both of which are critically important to advising business clients.” ADINA STORCH Senior Vice President, General Counsel and Corporate Secretary Global Industrial

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Featured team (left to right) MARGO WOLF O’DONNELL SEAN PEPPARD ERIC M. FLAGG CHELSEA WENDER JORDAN J. CALL ALEX EHLER ELSA B. SCHULZ

When your workforce spans front-office and warehouse environments, employment and human capital issues become twice as varied and complex. Operating in multiple jurisdictions with ever-evolving regulations further complicates compliance and risk management. Adina and her team rise to the challenge every day with help from Benesch teams to support labor and employment matters as well as M&A deals. By translating legal principles for multiple audiences and delivering up-to-the-minute guidance and ongoing education in practical, actionable terms, Benesch helps Global Industrial stay a distribution industry leader and an employer of choice. How can we help your team stay on top of workforce management? Learn more about our Labor & Employment Practice Group at www.beneschlaw.com/labor&employment.

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TECHNOLOGY

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Navigating AI in business: Insights and strategies for 2024

ERIC JOHNSON

ERIK BROWN

RYAN ELMORE

Senior Partner, West Monroe ebrown@westmonroe.com 312-386-6136

Innovation Fellow, West Monroe relmore@westmonroe.com 469-206-8039

Director, West Monroe ejohnson@westmonroe.com 612-428-1784

Erik Brown is a skilled software engineer and leader at West Monroe, delivering innovative technology solutions to meet clients’ business goals.

Ryan Elmore leads West Monroe’s Data Science Technology team, excelling in AI, ML and solution architecture to optimize processes and automation for clients.

Eric Johnson is a leader in West Monroe’s AI Lab focusing on digital products, experiences and services.

In 2023, AI dominated technology consulting conversations. How would you sum up your discussions with hundreds of clients across different industries? Eric Johnson: There’s a split in how generative AI is seen. Regulated industries have generally worried about rules and risks, and sometimes think it’s not practical – like when generative AI can’t do simple math or compute simple logic. Generally, this skeptical group needs to know when it’s useful, when it’s not and how it works. On the flip side, we’ve seen older companies, some over a century old, that are really into this tech, way more than other emerging tech like blockchain. They like how easy it is to understand and use – a quick tutorial, and they’re ready to get started. What mistakes have you seen businesses make in AI this year? Where have they made the right bets? Ryan Elmore: This year, we’ve observed some common missteps in how businesses approach AI. One mistake is preventing any exploration of its potential. Also, ignoring the data hygiene aspects and just expecting AI to be able to overcome that obstacle rather than addressing it head-on. Another is trying to explore all possible use cases instead of focusing on a handful of the most promising ones that align with your company’s core strengths. Some companies mistakenly believe AI can swiftly replace entire departments, like marketing or finance, which is far from reality. Treating AI as a separate, isolated initiative is also a misstep. It’s more effective to integrate AI into the business at a grassroots level and empower employees to leverage it in their daily tasks while also suggesting broader, more programmatic use cases.

While Silicon Valley has made significant advancements, we believe the practical application of generative AI is just beginning to unfold. We anticipate that 2024 will be a pivotal year for more substantial use and implementation of AI in broader business. What technology investments should executives make in 2024 to incorporate AI faster into their businesses? Erik Brown: Investing in scalable cloud infrastructure is crucial. Cloud platforms offer the flexibility and scalability needed for AI algorithms. Additionally, consider investing in AIspecific hardware like GPUs or TPUs, which can significantly accelerate AI processing. It’s also wise to invest in data integration and management tools, as AI systems require highquality, well-organized data to function effectively. In cybersecurity, AI can predict and mitigate threats more efficiently. For cloud computing, AI optimizes resource allocation and improves service personalization. Regarding data, AI enhances data analysis capabilities, leading to more informed decision-making. However, this integration also means increased complexity and potential security risks, requiring more robust security measures. What skills do business leaders need to hire for or develop to capitalize on AI? Elmore: We break down AI skillbuilding into two parts: Specialization and upskilling. Larger companies are already investing in data scientists and AI specialists. However, they shouldn’t overlook the need for data engineers to manage data pipelines and infrastructure. Equally important are business analysts who can translate AI insights into actionable business strategies and software developers

who are open to—and capable of— using AI to aid their development processes. In our experience, middle market organizations have a harder time attracting and retaining specialized technology talent and instead can access highly sought-after talent pools via consulting partners — as both a strategic advisor and execution partner. Upskilling your entire workforce on AI is another crucial piece of the puzzle. Not everyone is going to be

an AI expert, but everyone in your organization can know how to use AI—whether that’s knowing the right prompts to use with a chatbot (like ChatGPT), incorporating new AI plugins and advancements into software they use every day, or simply being aware of your company’s ethics and governance around AI. Training your entire workforce in basic AI and data literacy leads to a more AIcentric culture and can propel your organization to be more tech-forward. What is West Monroe doing to advance AI? Does it take its own advice? Johnson: At West Monroe, we’re not just talking about AI; we’re actively integrating it into our work. In 2023, we launched Nigel, a secure AI-powered tool that’s part of our daily operations. It’s based on the same AI technology as ChatGPT and is a game-changer for our team of 2,000 that prioritizes security and privacy for clients. We use Nigel for a variety of tasks, from drafting emails to data analysis. We also spun up an AI Lab this year, bringing together experts from different departments. This lab is a melting pot of ideas and expertise, helping us deeply embed AI into our culture and processes. It’s not just about improving our own

productivity, it’s about being better equipped to advise our clients. The three of you host a podcast for West Monroe called “This Is AI.” What does the podcast cover and why should people listen? Brown: The three of us talk about what we see in the market, with clients and at West Monroe—through the lens of addressing burning questions on AI. More specifically, we record the podcast on video so we can show reallife examples of how to code alongside AI or how to improve your prompts. We created the podcast for those who want to learn how to apply AI to their business practically today—and have something for both beginners and more advanced users. What future trends in AI should businesses be prepared for? Brown: Business leaders should anticipate more advanced natural language processing capabilities, AI in edge computing and the growing importance of AI ethics and regulation. Staying informed and most importantly, adaptable, is key to leveraging these emerging trends.

Listen to West Monroe’s This Is AI podcast WestMonroe.com/ThisIsAI

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HOMES

Metropolitan Brewing’s patio

METROPOLITAN BREWING

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BREWING From Page 1

or sales from distributors to retailers like liquor stores and restaurants — is decreasing, too, Stout said. Many consumers are switching away from craft beer, turning to wine, spirits and ready-to-drink canned cocktails. Even with inflation factored in, nationwide craft beer sales are down 1.2% year over year, according to data from market research firm NIQ. In contrast, spirit-based ready-to-drink cocktail sales are up 49.2%. Worsening matters is the massive debt load many breweries carry, taken on to survive the pandemic’s darkest days. When the pandemic was declared in March 2020, forcing taprooms and restaurants to close, Pilsen’s Lo Rez Brewing lost 80% of its revenue. Some business came back after restrictions lifted. But the brewery ended 2022 with revenue about 20% lower than in 2019. “We were trying to get creative and dig out of that hole over several years,” said founder Dave Dahl. “(I was) holding my breath and crossing my fingers that consumers would come back. And they didn’t.”

Too many hits Lo Rez, which opened its doors in 2017, closed them for the last time over Labor Day weekend. The revenue lost during the pandemic could not be recouped, and the money the brewery did bring in was not enough to keep up with rising costs from inflation or to pay off its debt. Dahl declined to disclose how much debt Lo Rez car-

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separate club and hotel. It’s not clear how much Reschke would pay for the 556,200-squarefoot Jewelers Building, but sources familiar with the sale negotiations said the price is believed to be between $35 million and $40 million. A sale in that price range would be less than the $51 million mortgage that John Hancock provided to the building’s longtime owner, a venture of Toronto-based real estate firm Dorchester. Reschke and spokesmen for John Hancock did not respond to 14 | CRAIN’S CHICAGO BUSINESS | DECEMBER 4, 2023

ried, but said the loans he took out during the pandemic were roughly equivalent to the “slug of debt” he took out to launch the brewery. Closure was his only option. Up in the Avondale neighborhood, the 15-year-old Metropolitan Brewery is preparing for its final day of service at its riverfront taproom on Dec. 17. The brewery filed for Chapter 11 bankruptcy protection in October, following a years-long dispute with its landlord. On top of that, sales were sluggish and the business’ debt load was heavy, said brewery co-founder Tracy Hurst. “We could’ve taken a couple of hits, but we just had too many,” she said. Many Illinois breweries, particularly the smaller ones, cite similar financial struggles and concerns. Some owners said they’ve been watching the closures and know that if an unforeseen challenge arises, they could be next. “There is no force out there that is greater than my desire to move forward,” said Kevin Cary, owner of Begyle Brewing in the North Center neighborhood. “(But) it is tough. I do get phone calls from people that want to get paid, and it’s hard to juggle and prioritize cash flow when it’s tight.” For a decade, the craft beer industry grew like wildfire in Illinois. The state had 54 breweries in 2011. But Stout argues that the mass closures now are not the result of a bursting bubble, and that the state is not overstocked on breweries. Illinois had 3.2 breweries per 100,000 adults over age 21, ranking 32nd in the nation in 2022, according to the Brewers Associa-

tion. Ohio has had 100 more breweries than Illinois and about 1 million fewer residents. For some craft breweries, beer sales have started to stabilize, even if they are lower than they once were. This year will be the first since 2019 that wasn’t riddled with mandated closures or COVID surges that kept people home. Brewery owners are starting to figure out their new normal.

requests for comment. A spokesman for real estate services firm Newmark, which has marketed the property for sale in recent months, did not respond to a request for comment.

Construction conglomerate Clayco is the largest tenant in the building. Late architect Helmut Jahn, whose namesake design firm recently moved out of the building, left his mark on its most prominent feature, a cupola on the 40th floor said to be the former home of a Prohibition-era speakeasy run by gangster Al Capone. Jahn turned that space into a meeting room for presentations. The building was completed in 1926 and designated as a Chicago landmark in 1994, according to city records. CoStar News first reported that Reschke was in talks to purchase the Jewelers Building.

Prominent feature Newmark has played up the ability of a buyer to convert the Jewelers Building into a residential use amid strong demand for downtown apartments. As of August, the building was about 72% leased to 39 tenants, many of them smaller users. The building’s annual net operating income is projected to be $3.6 million, marketing materials show.

New business model The brewery model that seems to be working best now involves cocktail and wine sales, Stout said. Breweries must carry a certain license to legally sell wine and liquor, and most Illinois craft breweries are not in that class. Some say they are considering switching. Others are looking to their distribution agreements as their revenue makeup is altered. At Hopewell Brewing in Logan Square, total revenue is projected to be up about 15% year over year. That growth came through a new distribution contract with a wholesaler. Hopewell had distributed its own beer since it launched almost eight years ago. But with the increased costs from inflation, shrunken taproom sales and loans coming due, it was grow or die, said co-founder Samantha Lee. But there’s a trade-off when small craft breweries contract with distributors. Hopewell must hit a certain growth target to break even. Lee hopes that will occur next year. “The stakes are high,” she said. “In order to survive, we need to grow. And that’s a really hard proposition.”

safe, secure and warm. But most important, it’s not a tent.” The units, which Swanson says cost just under $20,000 to build, have the additional advantage of being longer-lasting than a tent, he said. They could be reused to house homeless people or others in crisis, such as in the event of emergency dislocation from their homes. Ald. Walter Burnett, 27th, in whose ward Swanson lives, was on hand to see the demonstration model delivered to the parking lot of the Chicago Children’s Theater at 100 S. Racine Ave. He said he supports the project and is working to get Mayor Brandon Johnson’s administration to come check it out. “What (Swanson) is doing here is pushing the envelope,” Burnett said. “This is something worth looking at to help the migrants now and we could utilize it again.”

Design elements As designed, the units have space for two twin beds and a desk on the floor and a sleeping loft over them, beneath the peaked roof. They have electrical power, heating and cooling, a 5-gallon tank of clean water and space for 7 gallons of wastewater, and a composting toilet. There’s also “a delightful little one-foot front porch,” as Swanson described it. Swanson envisions cooking and showering being done in a shared building or in portables. “Our audacious goal is can we raise funds to build 100 of these in the next 100 days,” Swanson said. If building them at larger volumes, the cost likely would come down because of buying materials in larger quantities. Swanson said the factory could turn out 10 micro-homes a week. Each unit can house up to six people, which would mean the factory-built micro-homes would deliver new shelter for up to 60 people a week. In the past year, about

21,200 migrants have arrived in Chicago. Putting up tents is faster, Swanson acknowledged, but “this looks like a home. Dignity is important to us.”

Expanded effort Donations funded the $20,000 cost of the demo model, Swanson said, and he hopes to attract more. Aside from pitching the city, he’s also contacting church leaders about buying micro-houses to put in their parking lots and other spots. It’s possible donors would buy a unit to give to their church. Whether it’s the city or a church funding the units, Swanson said, they would become the owner. That idea “has potential,” Burnett said, because the units would then be on hand and in stock “ready to go” when needed. Some of the jobs created by ramping up production of the micro-houses might go to migrants themselves, if the appropriate governmental authorizations are made, Swanson said. “It’s not only about creating shelter, it’s about creating jobs,” he said. At its factory in the K-Town section of North Lawndale, Inherent employs about 20 people, many of them new to wage-earning employment, according to Swanson. Swanson, an architect, launched Inherent in 2022 to offer factory-built homes as a way to create housing for moderate-income people. So far, the firm has acquired a few dozen formerly city-owned lots and delivered three completed homes. About six months ago, Swanson said, he started considering factory-built micro-homes like these for temporary housing for unhoused people and others in need of shelter. The present crisis, with thousands of migrants arriving without shelter, exacerbated the need. “Our homeless population and our migrant population both need shelter,” Swanson said. “Outside of shelter, they have other needs, but they need shelter.”

As designed, the units have space for two twin beds and a desk on the floor and a sleeping loft over them, beneath the peaked roof. They have electrical power, heating and cooling, a 5-gallon tank of clean water and space for 7 gallons of wastewater, and a composting toilet. I PHOTO BY DENNIS RODKIN

PEOPLE ON THE MOVE

Advertising Section To place your listing, visit www.chicagobusiness.com/peoplemoves or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

ACCOUNTING / ADVISORY CONSULTING

BANKING / FINANCE

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LEGAL

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Plante Moran, Chicago

J.P. Morgan Private Bank, Chicago

Benesch, Chicago

Central Baptist Village, Norridge

Plante Moran has elected Jason Drake as its next managing partner, effective July 1, 2024. In this role, Drake will lead one of the nation’s largest accounting and business advisory firms by helping to expand its scope, reach and capabilities. Since a 1999 internship, Drake has spent his entire career at Plante Moran, focusing on audit, consulting and building and expanding the firm’s international offices and practice. Drake succeeds Jim Proppe, who held the position for the last seven years.

Larry Konstantellos has rejoined J.P. Morgan Private Bank in Winnetka as an Executive Director and Banker working with a small group of highly affluent individuals and families, including current and former business owners, and successful professionals. He has found that every individual has different needs, and he listens to their success stories, getting to know them on a personal level so he can deliver meaningful advice. Larry rejoins the firm from Charles Schwab.

PREMIER Design + Build Group, Buffalo Grove

Ronald S. Betman has joined Benesch as a Partner in the firm’s Litigation Practice Group. Ron is a veteran trial lawyer with three decades of experience Betman representing Fortune 100 companies, privately held entities, and individuals in high-stakes, complex litigation, and class action matters. Throughout the United States, he has a track record of achieving favorable outcomes in Cross state and federal court at both the trial and appellate levels. Theresa Cross has joined Benesch as an Associate in the firm’s Healthcare+ Practice Group. Theresa advises clients in the health care industry on a wide range of operational and legal matters, including regulatory compliance, mergers and acquisitions, tax exemption, and state and federal privacy matters.

Anna-Liisa LaCroix, MPH, LNHA, has been selected as new CEO at Central Baptist Village, a senior living community in Norridge. She served as CBV’s Administrator for the past 7 years. Anna-Liisa is an accomplished leader with over 28 years in senior living operations. She holds a Bachelor’s degree in Psychology, a Master’s degree in Public Health, and a gerontology certificate. Anna-Liisa is a Licensed Nursing Home Administrator and graduated from the LeadingAge Larry Minnix Leadership Academy.

PREMIER Design + Build Group welcomes Ryan Keefe as executive vice president, Midwest. In this new role, Ryan will expand the firm’s geographic footprint and further diversify its portfolio. He joins the firm with over twenty years of experience on high profile projects in the land development, multi-family, residential, educational, affordable housing and senior living sectors. PREMIER is a national firm with regional offices in Illinois, California, and New Jersey.

BANKING / FINANCE J.P. Morgan Private Bank, Chicago BANKING Busey Bank, Chicago Busey Bank welcomes Joe Schwall as Senior Vice President and Senior Relationship Manager. Throughout his 25-plus year career in the Chicagoland area, he has always done what is in the best interest of clients and built solid relationships that allow him to fully understand their needs—while providing solutions to grow their wealth. Joe offers advice-driven financial strategies to facilitate a client’s liquidity, investment management, trust, and personal financial planning needs.

BANKING First Bank Chicago, Highland Park First Bank Chicago, one Chicago’s top 5 privately owned banks, congratulates Brien Leahy on his recent appointment to the Josselyn Board of Directors. Leahy, President of Community Banking, is one of many employees giving time, talent and resources to our community and neighbors as part of our bank-wide culture of caring. We applaud Brien’s contributions to assist Josselyn in meeting their mission to ensure everyone has equitable access to the highest quality mental health care.

BANKING / FINANCE BDT&MSD, Chicago World Business Chicago announces the appointment of Ashish Lal, Partner, BDT&MSD, to its distinguished board of directors. World Business Chicago is committed to fostering inclusive and equitable economic development through business growth and expansion, workforce development, and community impact. World Business Chicago also promotes the Chicagoland region as a premier global hub for business and innovation.

P015_CCB_20231204_v3.indd 1

Mark Bubien has joined J.P. Morgan Private Bank in Chicago as a Vice President and Banker. Mark works with business owners, C-suite executives and other successful individuals who are looking for holistic ways to manage their wealth in a manner that is tailored to their needs. His first priority is to always do what is right for his clients, and he goes the extra mile to find the answers they seek and mitigate the hurdles that stand in their way. Mark joins the firm from Goldman Sachs.

BANKING / FINANCE

FINANCE LGIM America, Chicago LGIM America (LGIMA) is pleased to announce that Priya Joshi has joined the firm as a Senior Securitized Research Analyst, MBS. In this role, she is responsible for providing a high level of support to the US Credit Solutions & Annuity Teams that are responsible for all securitized product portfolio management. Priya has more than 20 years of industry experience with securitized products, prepayment analysis and modeling.

J.P. Morgan Private Bank, Chicago Iain O’Connor has joined J.P. Morgan Private Bank in Chicago as a Vice President and Banker working with successful families, entrepreneurs and professionals in the Chicagoland area. Taking a problem-solving approach to uncover each individual’s goals and aspirations for themselves and their families, he surrounds them with a team of experienced specialists to integrate personalized strategies for investing, estate planning, banking, lending and more. Iain joins the firm from Goldman Sachs. CONSTRUCTION Northern Builders, Inc., Schiller Park Northern Builders, Inc. is pleased to announce the hiring of Thomas F. Clarke as Senior Estimator. Tom is responsible for preparing construction Clarke cost estimates, outline specifications, and schedules for Northern’s design build projects. Tom brings over 30 years of extensive experience to Northern. Northern Builders, Inc. is pleased to announce the promotion of Jack E. Voltz Voltz to Senior Project Manager. In his expanded role, Jack is responsible for the oversight of the design-build process, inclusive of finding creative and cost-effective solutions for Northern’s clients to enhance schedule and ensure quality. Jack has been a member of Northern’s team for 5 years.

NON-PROFIT Central Baptist Village, Norridge Lori Altman, Chief Financial Officer at Central Baptist Village, a senior living community in Norridge, has been named 2023 Chicago CFO of the Year ® by the Chicago chapter of Financial Executives International. From a group of 5 distinguished finalists, Lori won the top award in the small notfor-profit category. She has more than 37 years of professional experience in for-profit and non-profit organizations and has spent the last 21 years serving the senior population.

MEDIA / SPORTS LAW Jenner & Block, Chicago World Business Chicago announces the appointment of Wade A. Thomson, Partner, and Co-Chair of the Business Litigation Practice, Management Committee, Jenner & Block, to its distinguished board of directors. World Business Chicago is committed to fostering inclusive and equitable economic development through business growth and expansion, workforce development, and community impact. World Business Chicago also promotes the Chicagoland region as a premier global hub for business and innovation.

LAW FIRM Taft Law, Chicago Intellectual Property attorney Tom Pasternak has joined Taft. Tom is a registered patent attorney and protects and defends his clients’ IP rights in the areas of patent, trademark, and trade secret litigation, licensing, and prosecution. He has experience in district courts across the United States, the ITC, the PTAB, and the Federal Circuit and Seventh Circuit Courts of Appeal. Tom serves clients in the e-commerce, communications, biopharma, and consumer products sectors.

Chicago Bears Football Club, Inc., Chicago

REAL ESTATE

World Business Chicago announces the appointment of Karen B. Murphy, SVP, Business Strategy and CFO, Chicago Bears, to its distinguished board of directors. World Business Chicago is committed to fostering inclusive and equitable economic development through business growth and expansion, workforce development, and community impact. World Business Chicago also promotes the Chicagoland region as a premier global hub for business and innovation.

CBRE, Chicago

NON-PROFIT

SOFTWARE

Obama Presidential Center, Chicago

WorkForce Software, Detroit / Livonia

World Business Chicago announces the appointment of Lori Healey, Senior Vice President/Executive Project Officer, Obama Presidential Center, to its distinguished board of directors. World Business Chicago is committed to fostering inclusive and equitable economic development through business growth and expansion, workforce development, and community impact. World Business Chicago also promotes the Chicagoland region as a premier global hub for business and innovation.

WorkForce Software names Jeff Moses CEO. A 25-year veteran of B2B Cloud SaaS, his expertise in go-to-market strategy & revenue generation positions him to lead WorkForce Software’s global operations, focusing on customer success & expanding the partner ecosystem. During Moses’ tenure as Chief Revenue Officer, the company posted its highest-ever revenue growth & closed the largest commercial agreements in the company’s history. Previous roles include positions at Blackbaud, Informatica and SAP.

CBRE, the world’s largest commercial real estate services and investment firm, has hired Jason Zyck to its Chicago Office as a Vice President, joining the Multifamily Investment Sales team of John Jaeger and Justin Puppi. Since 2005, the CBRE Chicago Multifamily team has completed over 200+ multifamily sales in the Chicago MSA and neighboring Midwest markets, totaling over $13 billion. Mr. Zyck joins CBRE from JLL, where he served as an Associate specializing in Multifamily investment sales.

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CommonSpirit plans ambulatory expansion despite financial losses The Chicago-based health system plans to add more facilities for patients in the coming year, as care continues to move outside of hospitals By Caroline Hudson, Modern Healthcare

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After a year of cost-cutting, CommonSpirit Health is looking to add ambulatory care capacity next year. The health system plans to add more facilities for ambulatory patients in the coming year, as care continues to move outside of the hospital, it said in financial documents released Nov. 15. The nonprofit system recently added 19 imaging centers, seven ambulatory surgery centers and six primary and urgent care sites across multiple states, including California and Texas. In May, the system acquired five Utah hospitals and more than 35 clinics from Steward Health Care. Also, Chicago-based CommonSpirit is partnering with LifePoint to add behavioral health services at four locations in Arizona, California, Texas and Tennessee in 2024. It plans to add up to eight additional sites by the end of 2028.

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What else is coming up? This year we combined all of our institutional review boards. Now, we’ll be able to have one signature for any of the latest clinical trials for the whole system. Let’s say it’s for the latest trial for cancer. We’ll be able to make it available in rural Wisconsin to Macon, Georgia, to uptown Charlotte, to South Side Chicago. We’re building out next year the national center for clinical trials [led by the Wake Forest University School of Medicine]. That’s going to allow us to work with NIH and industry partners so we can get those discoveries into the hands of doctors as quickly as possible.

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How is Advocate tackling workforce challenges and what potential future solutions do you see? The World Health Organization says there’s going to be a shortage of 15 million health care workers worldwide by 2030. We’ve got a number of nursing schools, and we’ll continue to make sure that we have the right educators. We’re building the second medical school in Charlotte [for] the Wake Forest University School of Medicine, and we intend to continue to grow physicians. We have four-year medical schools. What does it look like to use the digital capabilities—we have the virtual reality capabilities—and cut that training cycle to three years or maybe even two years? We’re looking at different innovative ways going forward that we can accelerate the time that it takes to become a physician. We need to continue to focus on pipelines, so we’re working

Its Virginia Mason Franciscan Health recently announced it is partnering with Amazon-owned primary care provider One Medical to offer specialty care. The additions are part of CommonSpirit’s five-year strategy, which includes reducing redundant technology systems and shifting to five operating divisions, from eight. In fiscal 2023, CommonSpirit reduced its reliance on contract labor and cut 2,000 non-clinical jobs. It identified $2 billion in potential cost savings after Catholic Health Initia-

tives and Dignity Health merged in 2019 to form CommonSpirit. The system, which operates 142 hospitals and more than 2,200 care sites across 24 states, on Wednesday reported a $738 million net loss in the first quarter of its fiscal 2024, compared with a $397 million loss a year ago. For 2023, CommonSpirit reported a net loss of $259 million, compared with a year-earlier $1.85 billion loss. Caroline Hudson writes for Crain’s sister publication Modern Healthcare.

with public schools now. There’s something that happens when a sixth-grader tours with a physician or pharmacist or a nurse. They get excited about what the possibilities are, and they may want to focus more on STEM programs.

How quickly can I get seen?” The whole consumerism focus is a major focus of ours. We’ve been a leader in virtual care. Nationally, we had more patients at home that we took care of for hospital-at-home than just about any other system in the country. This convenience factor is something that’s front and center with us.

How do you view the big retailers that are disrupting traditional health care? We see these big retailers as certainly competitors, but also potential partners. We get concerned about big retailers sometimes because they’re not coming in to build hospitals. They’re not building trauma centers. They’re not building birthing centers. They’re many times just focused on the commercial segment, and sometimes it disaggregates the care. The retailers that we are talking to, like Best Buy, they’re all about integrating the care. With Best Buy, for example, if you’re in the home, then you’re connected to all our physicians. You’re connected to all of our electronic health records. We’re going to work with those [retailers] that come with an idea of partnership and integration. Those who come just to focus on the commercial well, then I think we’re certainly going to continue to compete, and we have the size and scale now that we can compete effectively. What are the retail disruptors getting right? The No. 1 thing they’re getting right is the idea of convenience. Take my sons, for example. When something happens to them, first of all, I have to convince them to go to the doctor’s office. But when I do that, they’re not necessarily evaluating the quality scores that are publicly reported of one doctor’s office versus another. They’re like, “Who can I [access virtually]?

What role will partnerships play? We’ll continue to explore partnerships. At the Pearl, which is the innovation district in Charlotte, we’re partnering with Siemens, for example. Historically, we would have a vendor relationship, so they would sell us products, and then we would haggle over the price. Now, we have a partnership model with them, where they want to help work with us, with our physicians, on developing new medical devices and the data that comes out of there, so we can improve care. It’s not a vendor relationship. We have a lot of exciting conversations going on within the industry, [and] we’ll be announcing new partnerships over this next year. What issues within health care need to be addressed? We all have to work together on affordability. We have to work with pharma. We have to work with the government. Health systems certainly have a role to play. That’s why I’m such a big believer in prevention. The Benjamin Franklin quote, “An ounce of prevention is worth a pound of cure”—that quote really captures it for me because we can significantly reduce the burden of chronic disease if we all work together. Caroline Hudson writes for Crain’s sister publication Modern Healthcare.

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How United and other U.S. airlines lost momentum on sustainable jet fuel The lackluster performance highlights starkly different approaches around the world to spurring its use United Airlines presents itself as the unrivaled leader in cleaner jet fuel. A recent ad campaign featuring the garbage-can-dwelling Oscar the Grouch as the airline’s new “chief trash officer” publicizes its commitment to turn banana peels and old socks into less-polluting jet fuel. In another ad, the company says it’s “investing in more sustainable aviation fuel production than any other airline in the world.” Chicago-based United Airlines, like the rest of the aviation industry, is grappling with its enormous climate impact. United expects to burn more than 4 billion gallons of jet fuel this year, which will spout about 40 million tons of carbon dioxide into the atmosphere — more than double the pollution of all the cars in the company’s home state of Illinois. Global aviation generates 2.5% of man-made CO2, and it’s one of the industries that can’t be rapidly electrified. As the planet-warming pollution from driving vehicles and running power plants declines, the carbon toll of flying is only expected to rise. By 2050 aviation could exceed 20% of humanity’s total carbon footprint. That’s why airlines have focused on slashing emissions by dramatically increasing the use of sustainable aviation fuel, or SAF, made from things such as used cooking oil, animal fat and agriculture waste. Planes powered by these petroleum alternatives release far fewer heat-trapping emissions than those using fossil fuel. Only a half-dozen companies make commercial quantities of SAF, which accounts for about 0.1% of the world’s jet-fuel supply

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By Ben Elgin, Bloomberg

tainable fuels hasn’t matched its rhetoric. United consumed 2.9 million gallons of SAF last year, representing 0.08% of its fuel supply. That puts the company slightly ahead of its U.S. counterparts but far behind several airlines in Europe, which have to prepare to meet new requirements that don’t exist in the U.S. Air France-KLM has more than quadrupled United’s total by using 13.9 million gallons of SAF, making it the world leader by volume. Scandinavian Airlines, on the other hand, used 0.96% SAF, the highest percentage among passenger airlines and more than 10 times United’s percentage.

“This isn’t just about getting the cheapest fuel. This is about accomplishing something that’s existentially important to our business.” — Darrin Morgan, head of growth and investment at Amsterdam-based SAF developer SkyNRG

and costs at least twice as much to produce. Almost every major airline has pledged to use at least 10% sustainable jet fuel by 2030. For most, including United, this would amount to a hundredfold increase in only seven years. United has publicly embraced the enormity of the challenge. In an interview, Chief Executive Officer Scott Kirby sounds almost like an environmental activist at times, describing himself as an “admitted climate change geek going all the way back to college.” He’s concerned that the public still doesn’t fully grasp the looming dangers of our warming planet and says airlines must play a “leading role” to help solve the crisis. But United’s leadership in sus18 | CRAIN’S CHICAGO BUSINESS | DECEMBER 4, 2023

The lackluster performance in the U.S. shines a spotlight on starkly different approaches to spurring SAF around the world. European Union rules will require 2% SAF usage by 2025, 20% by 2035, and 70% by 2050. Governments in the UK and Japan have proposed similar rules. Many European airlines, including Air France-KLM, have supported the EU regulatory approach. Australia’s biggest carrier, Qantas Airways Ltd., recently called on the government to introduce its own requirements “to help kick-start local production of SAF.” United and other U.S. carriers, though, have staunchly opposed any such mandates on their home turf, arguing that the airlines are already voluntarily pursuing sustain-

able fuels and that requiring their use before adequate supplies exist will cause prices to soar. “We don’t want flying to become a luxury commodity,” says Helen Giles, managing director of environmental sustainability at Southwest Airlines Co. Regulators in California are considering including jet fuel under the state’s low-carbon fuel standard, which could force airlines to use more SAF or potentially pay penalties. Airlines for America, the trade group representing U.S. airlines, has criticized the idea, warning the state that it’s overstepping its authority. United’s Kirby is the group’s vice chairman. Instead of mandates, Kirby argues, governments need to pour financial incentives into the space, much the way they did for wind and solar over the past couple of decades. “Today it’s cheaper to produce a megawatt of electricity with wind and solar than it is with fossil fuels,” he says. “I believe the same thing can and will happen in SAF if we invest in it.” Although generous tax credits certainly helped spur wind and solar, so have mandates: About half of all growth in U.S. clean electricity since 2000 is linked to state laws requiring that electric utilities get a certain share of their power from renewable sources, according to a recent report from Lawrence Berkeley National Laboratory. Kirby says United’s attempts to build the market are more significant than simply counting its SAF usage. The centerpiece of these efforts is a $75 million investment in a sustainable flight fund, which has put money into a half-dozen clean-fuel startups. That certainly eclipses the investments of other big U.S. airlines. But $75 million adds up to less than 1%

of United’s annual jet-fuel bill. And this amount is unlikely to move the needle much for SAF developers, who often need a half-billion dollars to build a plant. To put this in broader perspective, McKinsey & Co. estimates that the world needs to invest about $175 billion a year—mostly on developing new sustainable fuels—if airlines are going to achieve their midcentury climate targets. Critics contend that United and other US airlines, by balking at higher prices for cleaner fuels and lobbying against mandates, are standing in the way of meaningful progress on SAF. “It’s disappointing to see this kind of greenwashing from United Airlines and Airlines for America,” says Nik Pavlenko, program lead for fuels at the nonprofit International Council on Clean Transportation.

Novel 2013 agreement A decade ago, United took a bolder approach to sustainable jet fuel. Some of the airline’s impact is visible at a century-old refinery in Paramount, a suburb of 50,000 people just outside Los Angeles. On a scorching August afternoon, with the nearby San Gabriel Mountains cloaked in haze, a dense web of steel pipes, tubes, scaffolding and towers thrums with life. This refinery, owned by Boston-based biofuels producer World Energy LLC, was the sole maker of SAF in the US for the past seven years. Its first domestic competitor came online in May. Instead of petroleum, the refinery is fed by oven-black rail cars full of animal fat with the consistency of Crisco. The shipments come from slaughterhouses across the U.S., Canada and Australia. Most of the fat is converted into renewable diesel for trucks. Each year the refinery also churns out about 8 million gal-

lons of jet fuel for use at Los Angeles International Airport and other nearby facilities. World Energy’s SAF produces less than half of the greenhouse gases of conventional options. And it exists, in part, thanks to United’s help. In 2013 the airline inked a novel agreement with the refinery. Details of the deal have never been publicly disclosed, but three people familiar with the transaction say the airline agreed to pay a slight premium compared with conventional jet fuel for a three-year supply when the refinery eventually came online. More important, it included a risky “warm idle clause,” which meant United would continue to pay the biofuels producer even if it had to stop delivering because of high feedstock costs or other reasons. Guaranteed cash flow made the project more attractive to financial backers. United also shared in the refinery’s upside. If the fuel could fetch a higher price than the airline would pay (which it eventually did), the producer could sell it elsewhere—and split the premiums with United. “United has been absolutely critical in getting SAF off the ground,” says Gene Gebolys, World Energy’s CEO, who declined to discuss the deal’s terms. “They moved when others wouldn’t.” It’s exactly the type of deal that most airlines are unwilling to make today. When United signed a second contract with World Energy in 2019, the airline announced it would purchase as much as 10 million gallons over the next two years. This time, though, the company shouldered none of the refinery’s risks and ultimately purchased less than 20% of the publicized amount. (United officials noted the huge drop in fuel usage during the Covid-19 pandemic.) United and other airlines began trumpeting enormous deals for the future supply of sustainable fuels, even when their plans lacked substance. Two years ago, for instance, United unveiled what it called “the largest publicly announced SAF agreement in aviation history” by committing to purchase 1.5 billion gallons over two decades from Alder Renewables, a clean-fuels startup. Alder rebranded its business in July to showcase a broader range of renewable products it hopes to make beyond just SAF; and Darren Fuller, the company’s chief commercial officer, downplayed the United deal in an interview, calling it “a little bit of a hangover from our previous management.” (After Bloomberg Green sought comment on this from United, Alder officials sent a written statement with a different tone that said they were excited to eventually provide sustainable fuel to the airline.) Plenty of airlines have uncorked similarly frothy deals. JetBlue Airways Corp., for instance, celebrat-

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‘Wasn’t the right fit for us’ Persuading airlines to pay the higher cost for SAF remains a central challenge. Aemetis Inc. is attempting to build a 90-million-gallon-a-year plant at an old army ammunition plant about 100 miles east of San Francisco. It plans to use waste from nearby almond orchards to help make the lower-carbon fuels, which could be used to power trucks or airplanes. But Aemetis needs to raise a half-billion dollars to build the plant, which it calls Carbon Zero 1. That’s a tall order, even for the publicly traded Aemetis, which generates about $250 million a year, mainly selling biofuels for road transportation. To show investors there’s demand for lower-carbon jet fuel, Aemetis two years ago invited airlines to negotiate for the plant’s future fuel supply. Despite all the airline pledges to use vast quantities of SAF, the discussions were hard. Airlines are notoriously tight-fisted when it comes to fuel, which accounts for about one-third of their operating costs. “There’s zero appetite to be one penny per gallon less competitive,” says Aemetis CEO Eric McAfee. The biofuels company eventually persuaded at least eight airlines, including American Airlines, Qantas and Japan Airlines Co., to pay a slight premium—10% above the future price of conventional jet fuel— for about half the plant’s expected output. Conspicuously absent from the flurry of Aemetis announcements: United. Negotiations with the company faltered, McAfee says, because United wouldn’t pay a higher price for the cleaner fuel: “They’d only buy it if it were at, or lower than, the cost of conventional jet fuel.” United officials said in a statement that the airline conducted diligence on the biofuels company and “determined that it wasn’t the right fit for us.” All of this raises a fundamental question about who should foot the bill for decarbonizing air travel. United’s chief argues that the public shouldn’t expect companies to pay a premium for climate-friendly products. “The blunt answer is, companies, individuals and governments are not going to buy green products unless they’re cost-competitive. They’re not,” Kirby says. “This is coming from someone that really wants to make a difference on climate change.” But if airlines are unwilling to pay more for cleaner fuels, it thrusts the responsibility onto the

public, primarily through government incentives. This, in effect, would lead to all taxpayers subsidizing the wealthiest, who fly the most. In the U.S., adults in households earning more than $150,000 fly more than five times as often as those in households making less than $50,000, according to a 2018 survey by Airlines for America. It’s a different story in Europe, where airlines are already absorbing this added cost—and passing it along to travelers. Air France-KLM, for instance, adds a surcharge of €1 to €24 ($1 to $25) to all flights departing from France and the Netherlands to help cover the extra cost of SAF. The airline said it expects the added expense to total €100 million this year and says it could reach €1 billion by the end of the decade if costs don’t drop. Sitting at a long conference table inside World Energy’s offices alongside the Paramount refinery, Gebolys relishes this topic. He’s working to expand the facility to produce dramatically more SAF—at a hefty cost of $2.5 billion—and seems to have largely turned the page on airlines spurring the market for cleaner jet fuel. Instead, he exuberantly outlines his vision of selling decarbonization directly to corporations, such as tech giants and consulting firms. These companies have goals to reach net-zero emissions, but they must somehow address their sizable climate footprints from corporate travel. “The real market is for decarbonized flight,” Gebolys says. He’s referring to a nascent market where companies such as Microsoft Corp. and Deloitte that book a lot of corporate travel buy certificates that represent a certain quantity of sustainable jet fuel. This payment helps cover the cost premium of SAF, which makes it competitive with conventional jet fuel and spurs producers such as World Energy to deliver more of it into the market. The buyer of the certificates then takes credit for that cleaner jet fuel—and applies the carbon savings to its own footprint. Microsoft recently announced a 10-year deal to purchase SAF certificates from World Energy representing 44 million gallons of SAF, which will allow the tech company to trim its reported emissions by almost a half-million tons over the next decade. This could be a creative way to drive more demand, but it’s unclear how many corporate buyers will step up to pay the hefty premiums. Morgan Stanley reported SAF certificates will likely cost “hundreds if not thousands of dollars” for each ton of CO2 they remove from a buyer’s footprint. (To put this in perspective, many carbon offsets sell for $5 to $10 per ton, though their impact is often dubious.) For SAF to really take off, airlines will have to match their rhetoric with action. But this would require airlines in the US to face down what Darrin Morgan, former director of sustainable aviation fuels at Boeing Co., describes as an industrywide risk most aren’t set up to recognize. “This isn’t just about getting the cheapest fuel,” says Morgan, now head of growth and investment at SkyNRG, an Amsterdam-based SAF developer. “This is about accomplishing something that’s existentially important to our business.”

ChicagoBusiness.com President and CEO KC Crain Group publisher Jim Kirk, (312) 397-5503 or jkirk@crain.com

BLOOMBERG

ed a deal two years ago to buy 670 million gallons of SAF at a price competitive with traditional jet fuel. The airline claimed to be well ahead of its 2030 targets. “We are well past the point of vague climate commitments,” declared JetBlue CEO Robin Hayes. This miraculous supply of affordable SAF was supposed to begin arriving this year. But JetBlue’s deal was with a startup that had only a few employees and no facility to produce fuel. The airline quietly pulled the plug a year later, mentioning deep in an unrelated press release that the arrangement had been “terminated.” JetBlue didn’t respond to multiple interview requests.

Startup uses carbon removal tech on Illinois and Mississippi farms Eion has taken CO2 out of the atmosphere using what’s known as enhanced rock weathering By Michelle Ma, Bloomberg

A startup attempting to reverse climate change by scattering crushed rocks on farmland has successfully removed its first tons of carbon dioxide from the atmosphere. Eion has been deploying its technique commercially for eight months on farms in Mississippi and Illinois. The company says those tests have allowed it to remove approximately 50 tons of CO2, the first deliveries of a 500-ton purchase by Stripe Climate. In doing so, Eion has validated its approach to carbon removal, though it remains far from proving it’s a viable pathway for removing some of the billions of tons of CO2 that scientists estimate will need to be removed from the atmosphere annually by midcentury to stave off the worst effects of global warming. The backbone of Eion’s carbon removal technology — dubbed enhanced rock weathering (ERW) — is the mineral olivine, which is quarried, ground up and scattered across farmland. As that mineral dissolves, a series of chemical reactions occurs that captures CO2 as it moves through the soil. That CO2 eventually makes its way through waterways to the ocean, where it is permanently locked up. Stripe has repurchased an additional $1 million of carbon removal services from the company.

MRV Eion is focused on refining its monitoring, reporting and verification techniques (MRV), according to chief technology officer and co-founder Elliot Chang. MRV is essential to ensuring that companies promising to remove CO2 from the atmosphere are actually delivering. “How do you measure something that was captured and then flushed away? That’s the open system challenge,” Chang said. He developed a way to measure the soil after olivine applica-

tion, looking for trace elements in the soil samples that indicate the mineral has dissolved. Based on those measurements, Eion can model how much CO2 has been captured. The company then calculates the total of CO2 removed after accounting for the emissions generated through the process of mining, grinding, transporting and applying the olivine.

Pitch to farmers For ERW to gain widespread use as a form of carbon removal, the agriculture industry will need to get onboard. Eion and other ERW startups pitch it to farmers as a substitute for agricultural lime, which is used to stabilize soil acidity. Chang said Eion’s olivine is cheaper than traditional agricultural lime in part because the company is able to sell carbon credits, offsetting some of the costs. It says the olivine can be used as a 1-to-1 replacement. Currently, the startup has a handful of partnerships with farming co-ops in the southern and midwestern US. It also has a contract with mining partner and investor Sibelco, which guarantees the startup access to a minimum of 500,000 tons of olivine per year. It takes approximately one ton of olivine to remove nearly one ton of CO2 per Eion’s methodology. Sibelco’s Chief Strategy and Business Development Officer Ian Sedgman estimates that the total market for olivine is upwards of 50 million tons annually. That would require farms across North America, South America and Europe to make the switch from agricultural lime. (Olivine isn’t necessary on all farms, because it’s mainly used to address acidic soils, which not all regions have.) “If we put a very ambitious but achievable target on Eion, if they scale to between 5 and 10 million tons a year, that would already be the largest negative emissions company on the planet by a huge scale,” Sedgman said.

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