JUN 29, 2021
With Illinois set to create 110 new recreational marijuana dispensaries to address some of the equity issues surrounding the state’s initial licensing rollout, some of the challenges that had stopped dispensary licenses from being distributed are now on their way to being resolved.
Unfortunately, similar problems are already cropping up in the process to award craft grow licenses around the state. And lawsuits will follow.
The dispensary measure expected to be signed into law soon will clear the way for the state to distribute 75 licenses that were supposed to be awarded last year, and would create second and third round lotteries of 55 licenses for social equity applicants who meet a certain scoring threshold. This is a step in the right direction to finally getting more dispensaries in Illinois, with a more diverse array of owners. But potential delays in the licensing process for cannabis craft growers mean that the state is in jeopardy of not having enough cannabis product to supply the expected uptick in demand from new retail stores.
Some of the same questions about application scoring that plagued the dispensary licensing process appear to be bubbling up in the long-delayed process to award craft grower licenses. On June 2, the Illinois Department of Agriculture began sending out a fourth round of deficiency notices to “top scoring” craft grower applicants. It appears that, as with dispensary applications, teams that did not have veteran ownership were shut out, potentially in violation of the Illinois Constitution.
And, as with last year’s dispensary licensing fiasco, a poorly administered process for awarding craft grower licenses will result in lawsuits that could slow or even halt the already-burdensome procedures for licensing craft growers. But there is an answer.
Illinois law allows up to 150 craft grow licenses and requires that up to 60 additional craft grow licenses be awarded by the end of this year. To avoid lawsuits and to make sure that a sufficient number of craft growers are up and running to meet the demand from new dispensaries, the state should consider releasing a second tranche of licenses for non-veteran social equity teams with strong scores. The state should also ensure that any winners who lost their craft grow properties due to the State’s long delay will not be penalized.
And, given the length of time the licensing process is taking, as well as the time it takes for build, Illinois should comply with its own law and ensure that the new licensing round of 60 happens on schedule. These simple steps would allow well-qualified applicants to move forward in opening their businesses and producing cannabis for the state’s new dispensaries.
Illinois’ leaders have shown impressive commitment to preserving the progressive social equity component of the state’s cannabis legalization program. But the flawed implementation of that system must not be allowed to slow the growth of one of the few economic sectors actually booming in the pandemic economy. Right now, a small handful of large-scale cultivators are reaping the rewards. Other states have many hundreds of smaller facilities, allowing for more diverse and varied ownership.
We should learn from our mistakes and adjust the licensing requirements before they bog down in complaints and potential litigation. The state should release additional licenses now. Offering a clear path forward to applicants as soon as possible is the best way to make sure the state’s social equity cultivation efforts do not stall.
Bryna Dahlin is a partner at the Benesch law firm who advises businesses involved in all aspects of the cannabis industry, as well as companies impacted by cannabis law. She provides counsel to clients on critical issues such as regulatory compliance, risk avoidance, company formation, and contracts and licensing.
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