Retail Marijuana lottery winners avoid losing their licenses
Cannabis Dispensary Licensee Faces Deadline to Secure Store Location in Illinois.
Just one winner of a cannabis dispensary license is at risk of losing it tomorrow when a deadline hits for pot-shop licensees to have found a location for their stores.
It’s a far lower number than many had feared.
The state used lotteries to award 185 new dispensary licenses in the summer of 2022, which would nearly double the number of marijuana shops. Winners originally had up to a year to get stores open or find a location, but the deadline was extended last year by legislators. Legislation that would have again extended the deadline died in the General Assembly’s spring session.
The new licenses are critical to Gov. J.B. Pritzker's goal of diversifying ownership in the cannabis industry. The deadlines are just the latest potential stumbling block, along with bureaucratic delays, litigation and legislative infighting.
“(The Department of Financial & Professional Regulation) has been working as hard as it can to get that number down as low as humanly possible,” says Erin Johnson, the state’s chief cannabis regulation oversight officer. “It’s about becoming operational, finding a location. But it’s also about proving that you have taken steps to find a location. Obviously, zoning in Chicago is not easy.
“IDFPR is looking at all those circumstances and doing what they can to help folks along to prevent a large-scale recision of licenses. It should have a fairly minimal impact. We’re doing everything we can within the bounds of statute and the rules we have to follow to make sure they’re able to open.”
Johnson says new licensees have opened 108 cannabis stores, nearly equaling the 110 stores operated by the winners of the original medical marijuana licenses.
The Independent Craft Growers Association, which represents winners of new licenses to grow marijuana, says 28 of 39 license winners are at risk of losing their licenses Aug. 1. The group is seeking a deadline extension from the Department of Agriculture.
When Illinois legislators voted to legalize recreational marijuana in 2019, they specifically aimed to diversify the largely white and male ownership of the industry by favoring “social equity” applicants who had either been arrested and convicted of low-level marijuana possession or lived in neighborhoods hit hard by the war on drugs.
The state issued a diversity report yesterday that found 59% of retail licenses issued through January 2023 had gone to minority- or women-led businesses, up from 21% in the original round of licensing under the medical marijuana program. The report says Illinois has higher women and minority ownership than other states.
The state says that new licensees account for about one-third of the industry’s sales.
“We are on the right track,” Johnson says. "We are seeing more people open."
The biggest challenge for license winners is lack of funding. Fortunes in the cannabis industry have changed dramatically since Illinois legalized marijuana. Weed stocks fell out of favor, and hopes for banking reform and widespread legalization have faded.
The state has stepped in to help fill the gap with a $10 million loan fund for dispensaries. The state plans to begin issuing $240,000 loans to retail licensees in the next couple of months. But it can cost $1 million to open and stock a dispensary.
