By: Liane McCory and Micah Bucy
As many that follow the industry know, in June 2019 Illinois signed into law the Cannabis Regulation and Tax Act (Rec Act), that legalizes adult cannabis use for those above the age of 21 years old starting January 1, 2020. Illinois is the 11th state where adult-use of marijuana has been legalized (it’s also legal in D.C.). The next step is rolling out the supply. In order to facilitate this in short order the Rec Act creates 2 separate licensing processes: the first is by permitting the state’s existing medical marijuana growers and dispensers to become licensees (while still maintaining their medical cannabis license) and the second is through a new competitive application process. Under the 1st licensing process, existing cannabis operators are presumed qualified to operate under the Rec Act because they are already operating cannabis facilities pursuant to the Illinois regulations (Department of Agriculture and Department of Financial and Professional Regulation). In order to add a Rec Act permit, the existing operators simply need to submit an application and meet the requirements the Rec Act sets out (which consist primarily of financial requirements). This process allows existing operators to be the first into the market which allows for sales on January 1, 2020.
The second licensing process is a competitive one. At the moment, the state is only accepting applications to operate dispensaries. The Department of Financial and Professional Regulation (DFPR) will oversee this application process which will grant up to 75 dispensary permits – apportioned per the below map. These applications for dispensary licenses became available October 1st and can be found here. Applicants will be required to submit their applications in-person at the DFPR in Chicago beginning December 10th and the DFPR will accept them through noon on January 2nd. The application fee is $5,000 per application. A person or entity may have a financial ownership interest in up to 10 dispensaries.
The Rec Act permits upwards of 500 dispensary facilities, so it is fair to assume that this current application window will not be the last opportunity to get in on the Illinois market, but those who are able to win these initial coveted permits will have a competitive edge against those that have to wait for Round 2 or 3. It is also worth noting that the Rec Act permits local authorities from severely curtailing the number of cannabis businesses in their municipalities, which makes it all the more important to win a dispensary permit in this application round.
Digging a bit more into the application itself, there will be a total of 250 points available, divided as follows:
- Security and Record Keeping (65 points)
- Business Plan, Financials, Operating Plan, and Floor Plan (65 points)
- Status as a Social Equity Applicant (50 points)
- Knowledge and Experience in Cannabis or Related Fields (30 points)
- Suitability of Employee Training Plan (15 points)
- Labor and Employment Practices (5 points)
- Environmental Plan (5 points)
- Illinois Owner (5 points)
- Status as a Veteran (5 points)
- Diversity Plan (5 points)
- Bonus Points/Tie-Breaker for a Community Impact Plan (up to 2 points)
Based on the scoring criteria above, the DFPR will license only those entities that can demonstrate they can operate a regulatory-compliant operation. There is an emphasis on applicants that are, or include, a Social Equity Applicant (SEA). It’s not clear at this point whether the SEA section is all-or-nothing, but it is pretty clear that an applicant will be hard-pressed to achieve a competitive score without earning some points in this category. There are a couple ways to qualify as a SEA, but whether you’re an in-state applicant or an out-of-state applicant you need to start working on qualifying as an SEA and putting your application for this initial round! Cannabis Law PA has experience successfully assisting entities seeking SEA status in other jurisdictions, but the key is to start now while time is on your side. If you have questions on how best to get started, please contact Micah Bucy at (717) 703-0813 or Judith Cassel at (717) 703-0804.