By: Scott F. Roberts
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RECREATIONAL MARIJUANA IN ILLINOIS
HERE’S WHAT WE KNOW ABOUT THE APPLICATION PROCESS
Anyone wishing to break into Illinois’s new recreational marijuana industry should start preparing to apply for an operational license as soon as possible. Knowing when to apply and how the state will score applicants improves your chances of getting a license. Here is what we know about the process so far:
Applications must be completed by January 1, 2020
Applicants with active medical marijuana licenses can already apply for a recreational marijuana license, and may receive early approval. The period for new applications is expected to start on October 1, 2019 and close on January 1, 2020. All applicants will be notified of approval by May 1, 2020. Only 75 Conditional Licenses will be issued in this first application period, subject to applicants finding a permanent location and obtaining an Adult Use Dispensing Organization License. These Conditional Licenses are awarded proportionately to population throughout the state. For example, 47 licenses will be awarded in the Chicago-Naperville-Elgin area (as defined by the Bureau of Labor Statistics), 2 licenses will be awarded in the Rockford area, and 3 in the Peoria area, among others.
“Social Equity” Applicants Have an Advantage
Applicants who qualify for “social equity” status see many benefits. For example, application fees are reduced from $5,000 to $2,500 and two-year license fees fall from $60,000 to $30,000. Additionally, applications are approved on a point-based selection system, with 50 points awarded for social equity status (out of 250 total points). For the remainder, applicants will need an Employee Training Plan (15 points), Security and Record Keeping Plan (65 points), Business Plan/Financials and Floor Plan (65 points), and Knowledge and Experience in the Cannabis Field (30 points). Minor amounts of points are also awarded for employment practices, diversity, Illinois residency, veteran status, and diversity plan.
To be considered a social equity applicant, one must:
- Have an entity controlled by one or more individuals that have resided in an area disproportionally impacted by the War on Drugs for at least 5 out of the past 10 years,
- Be a member of an impacted family, or
- Have been previously arrested for a cannabis-related offense that is eligible for expungement under the new law.
Disproportionally impacted communities include areas that have had a high arrest and incarceration rate for cannabis-related offenses (specifically the use, transport, and cultivation of cannabis) and meet any of the following criteria:
- Has a poverty rate of at least 20%,
- At least 75% of children in the area participate in the federal free lunch program,
- At least 20% of households receive assistance under the Supplemental Nutrition Assistance Program (also known as SNAP or food stamps), or
- The area’s average unemployment rate has exceeded 120% of the national average for at least two consecutive calendar years before the application is filed.
The Department of Commerce and Economic Development will specify these areas before the application period begins.
What if you do not meet the social equity applicant standard on your own? Applicants may also earn the extra points if they have at least 10 full-time employees, of which 51% reside in an impacted area or have been convicted of an expungable offense.
Each Owner and Board Member Must Be Approved by the Illinois Department of Financial and Professional Regulation (“IDFPR”)
The state’s professional regulation department, IDFPR, is in charge of implementing multiple aspects of the new recreational marijuana program, including licensing of dispensaries. The IDFPR will look at the “principal officer” of each entity applying for a license. The application requires principal officers (owners holding at least 1% of the total interest and board members holding at least 5% of the total interest of a publicly traded corporation or revenue or control arrangement) to fill out a separate Principal Officer Application, which will be processed by IDFPR. A person may not be a principal officer or hold any financial interest in more than 10 adult use dispensing organizations. Applicants must provide attestations, criminal history background check, resume, financial disclosures, and a letter of good standing from the entity’s licensing agency, among other documents. Principal Officers should be aware that these documents will become public records that can be requested via the Freedom of Information Act.
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.