Illinois Delays Cannabis Dispensary Licenses Intended For Minority Entrepreneurs

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Budding weed entrepreneurs will have to wait at least another month to learn if they’ve won one of 75 coveted dispensary licenses from the state.

The licenses were supposed to be awarded May 1, but Gov. JB Pritzker signed an executive order at the end of April indefinitely suspending the decision, citing difficulties related to the coronavirus pandemic and glitches in processing the applications.

Originally, all 75 licenses were to be awarded at the same time, but now some applicants could be awarded a license next month while others will have to wait until at least early August.

Former state Sen. Toi Hutchinson, who oversees the state cannabis program, told the Cook County Cannabis Commission the delay is necessary to make sure licenses are issued correctly and to avoid lawsuits that may arise from applicants that lose out. Hutchinson acknowledged the delay hurts those waiting on the decision.

“My biggest worry is that any delay … makes it very hard for the people, who are the entire intent of this, to weather,” Hutchinson said.

Meant to increase minority ownership in an industry overwhelmingly dominated by white men, the licenses are prioritized towards so-called Social Equity applicants.

To qualify for social equity status, at least 51 percent of an ownership group applying for a state license has to live in an area most impacted by the war on drugs, been arrested or had a family member arrested for a cannabis-related offense; or have more than 10 full-time employees, at least 51 percent of whom would otherwise qualify for social equity status.

As previously reported by Block Club, the state hired accounting firm K.P.M.G. in February to grade more than 4,000 applications submitted by more than 700 applicant teams. The firm was brought on board more than a month after applications were submitted to the Illinois Department of Financial and Professional Regulation.

Each applicant was permitted to apply for up to 10 licenses, and 50 points out of a possible 250 were awarded to those who qualified for social equity status.

Hutchinson said the company in charge of the grading system banned its employees from traveling, “… which really slowed down everything on the dispensary side,” she said.

As the applications were being reviewed, a new issue arose.

The state had implemented emergency tie-breaking rules for applicants receiving the same score — but those rules were set to expire June 6.

Proponents of the state’s cannabis program tried to correct the problem by including permanent tie-breaking rules among a host of legislative tweaks to the state cannabis law in the May legislative session. The bill passed the Senate, but it did not come up for a vote in the House.

Without that fix, Hutchinson filed permanent tie-breaker rules with a legislative oversight committee June 5. That mandates a 45-day public comment period starting June 15, as well as another 45-day period for state officials to respond to the questions.

Hutchinson said the state should know by mid-July which applications can be awarded a license outright, having received the highest scores. 

“All 75 licenses will not necessarily all be awarded at the same time. Some licenses could be awarded to applications that didn’t tie with any other application,” said Charity Greene, a spokeswoman for Pritzker.

Hutchinson told the commission owning a dispensary is not the only avenue into the industry. Craft weed farms, infusing companies and transportation companies are all routes to wealth and present fewer barriers to entry in terms of cost, she said.

However, licenses for those businesses — meant to be awarded July 1 — are also expected to be delayed.

While the pandemic delayed the new licenses, dispensaries have remained open. In May, statewide sales totaled more than $44 million dollars, the highest monthly total since recreational weed became legal Jan. 1.

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