By: Scott F. Roberts
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Illinois Craft Grower Licensing Explained
An Illinois craft grower license allows the holder to cultivate, dry, cure and package cannabis. To apply for this license, one must submit a completed application to the Department of Agriculture. The amount of cannabis a license holder can grow is limited by square footage. A craft grower may have up to 5,000 square feet of canopy space for marijuana plants in the flowering stage. It should be noted that this space only includes the space occupied by the plants and does not include any aisles or walkways in between the plants. This amount may be increased over time in increments of 3,000 square feet based on the department’s determination of market need, capacity, and the license holder’s history of compliance. The largest space that will be allowed by the Department will be 14,000 square feet for plants in the flowering stage. As noted in our previous article on the likely shortage of marijuana products in the Illinois market, we believe this is likely to occur.
The state is currently issuing 40 craft grower licenses before July 1, 2020, though it is possible this could be delayed due to COVID-19. This number will increase by another 60 licenses after Dec 21, 2021. Until that time, those who receive a craft growers license may not transfer or sell it is another business or individual.
An individual or business may only possess 2 craft grower licenses. However, they may have an ownership interest in a third craft grower license so long as they do not personally possess the license. This means that you can have 2 craft grower licenses for your own business but also have a 10% ownership interest in another craft grower license.
A business may have a 10% or less interest in a cultivation center while holding a craft grow license, but an entity may not hold a cultivation center license and a craft grower license at the same time. An applicant must choose which it would prefer to have. This is because the Department does not want one business or individual to grow a significant portion of the cannabis for Illinois consumers. By spreading out who can grow cannabis this allows for more opportunities in the cannabis industry and keeps production flowing, even if one grower is experiencing issues.
So how do you get approved for a craft grower license? The application is based on a scoring system. Points are assigned to various plans that are required by the Department, such as cultivation, record keeping, security, and so on. These plans are each worth a certain amount of points all added up together at the end to determine a final score. There are 1000 points available. The Department considers top scoring applications to be those which receive 75% or more of the possible points available. If the Department deems an application to have a top score it is approved. The full point breakdown is as follows:
- Suitability of the proposed facility 75 pts
- Suitability of employee training plan 50 pts
- Security and record keeping plans 145 pts
- Cultivation plan 75 pts
- Product safety and labeling plan 95 pts
- Business plan and description of services to be offered 110 pts
- Social equity applicant (if applicable) 200 pts
- Labor and employment practices 20 pts
- Environmental plan 20 pts
- Illinois resident for 5 + years 90 pts
- Company owed 51% by a veteran 20 pts
- Diversity plan 100 pts
There are additional bonus points available to applicants who include a community benefits plan, substance abuse prevention plan and local community/ neighborhood report. Each plan can be awarded a maximum of 2 points. These bonus points are only considered if more than one application receives the same score and a tie breaker is required.
Based on the point values assigned, the state’s main goals for the cannabis industry can clearly be seen. They want to have Illinois cannabis businesses owned and operated by Illinois residents, especially those which have been disproportionately impacted by previous cannabis reform, and to provide safe cannabis to consumers. If an applicant can show that they have been an Illinois resident for 5 years or more and that they qualify as a social equity applicant, they immediately receive almost 300 points. This provides an immediate advantage to any applicant who can meet these requirements. Also keep mind, the highest point values are given to the diversity plan, security and record keeping plans, comprehensive business plan, and product safety plan. By focusing primarily on these big-ticket items an applicant could easily pick up 740 points simply by mastering half of the total requirements. Just imagine how high your final score could be!
However, to get, and maintain this advantage requires complete transparency with the department. Applicants can be denied for non-disclosure or providing false information. In most licensing situations hiding information can be more damaging than disclosing whatever it is the applicant has done in their past. The only thing that could pose a potential issue would be delinquent filing of taxes by an officer or member of the entity. This means that you should check with all business partners whether they individually meet the license requirements prior to applying with the Department.
Once an applicant is approved, they must pay the $40,000 license fee and be up and running within 6 months. An extension to this time frame may be requested if good cause can be shown. This is especially important for those who may receive approval during the spring and summer of this year while COVID-19 conditions are still occurring. This current situation may dramatically slow down any initial timeframe an applicant would have had for facility construction or improvement. Make sure to keep track of any potential hiccups that COVID-19 causes to production and inform the Department if any extensions are required.
Another important timeframe to keep in mind is that a facility is not able to stop production for a period of more than 90 consecutive days. This includes craft growers who are planning on moving from one location to another. No extension is available from the Department. This is because the Department wants to ensure cannabis products will be available for consumers.
This license is renewed annually, and the license holder should receive notice of renewal 90 days before the expiration of their license. It takes about 45 days for the Department to consider renewal. In other words, you have to stay on top of your renewal date or risk losing your license.
Mr. Roberts is the founder and managing member of Scott Roberts Law, a Detroit-based Cannabis Business Law Firm founded in 2014. Scott has spent his entire career representing businesses and helping them comply with municipal, state and local regulations, as well as assisting on transactional corporate and real estate matters. Scott is an accomplished attorney, author and public speaker, having spoke at CannaCon, Cannabis Industrial Marketplace, CannabisAid, and 420 Canna Expo, to name a few. He has also taught Continuing Legal Education on Marijuana business matters, meaning other attorneys see him speak to learn about the nuances of cannabis business law.