Pot Shop Licenses Issued To New Owners For 1st Time Since Legalization

CHICAGO — More than three years after Gov. J.B. Pritzker signed the law legalizing recreational marijuana in Illinois, state regulators have issued the first conditional licenses to businesses that applied for new licenses under the law.

Pritzker and the Illinois Department of Financial and Professional Regulation issued 149 conditional adult use dispensing organization licenses to about 100 applicants selected in three lotteries conducted last summer.

Under the terms of the conditional licenses, the awardees have 180 days to built out their dispensaries to receive approval for a fully functional store, although they may apply for extensions.

“The release of these licenses means a transformation of the retail side of Illinois’ cannabis industry, creating more opportunities for individuals from all backgrounds to reap the benefits of legalization as employees and ancillary service providers,” said IDFPR Secretary Mario Treto.

“These licensees continue to lay the groundwork for a cannabis industry more diverse and equitable than any other in the country," Treto said. "I am extremely proud of our team for their work over the past two years and look forward to working with these new businesses owners throughout the next stages of licensure.”

Of the new licenses announced Friday, 111 are in the Chicago metropolitan area. Another 36 more new licenses are expected to be released next month.

There are currently 110 licensed cannabis dispensaries in Illinois. They include the 55 dispensaries that operated under the medical pilot program prior to the 2019 passage of the Cannabis Regulation and Tax Act, as well as the 55 "second-site" locations permitted by the law.

That law — hailed by its backers as the "most equity-centric" marijuana legalization bill in the nation — called for the first new licenses to be issued in the spring of 2020.

Instead, due to delays that the Pritzker administration attributed to the coronavirus pandemic, as well as a litany of litigation that has challenged the administration's implementation of the law.

In May, a Cook County judge lifted a stay on the issuance of the new licenses in a case that challenged the constitutionality of a provision in the first version of the law that required applicants be owned by veterans to qualify with maximum points.

And last month, a federal judge refused to block the issuance of the licenses in an opinion issued in a case filed by two out-of-state residents who alleged the licensing process discriminates against them.

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The newly announced licenses are the first that applied since the passage of the legalization law, which laid out a scoring system that called for applicants to be considered "social equity" applications to qualify for licenses.

In the first pot shop license lottery, rich, white men with political connections won a significant portion of perfect scores, according to the Associated Press, rather than social equity applicants from areas disproportionately harmed by cannabis prohibition.

The definition of social equity applicant was amended last year, and in March the Pritzker administration announced a simplification of the application process.

According to the governor's office, 41 percent of the businesses selected through last year's lotteries said they were majority Black-owned, 38 percent did not disclose the race of their majority ownership, 7 percent reported they were majority white-owned and 4 percent said they were majority Latino-owned.

“Illinois is leading the way in addressing the War on Drugs as no state has before, and dispensary ownership that reflects our state’s diversity is a product of that commitment,” Pritzker said in a statement. “These licenses represent a significant step toward accountability for the decades of injustice preceding cannabis legalization. Illinois will continue to deliver on the promises of putting equity at the forefront of this process.”

In addition to efforts to diversify the ownership of retail cannabis locations, the state offers low-interest loans to qualified applicants through the Social Equity Cannabis Loan Program, which is administered by the Department of Commerce and Economic Opportunity.

According to the governor's office, the first round of social equity applicants are expected to finalize loan agreements in the coming weeks, and the next phase of the program will be launched soon.

“I am pleased to see more licenses coming out today,” State Rep. La Shawn Ford (D–Chicago), who sponsored last year's bill that aimed to clear the way for social equity applicants to begin receiving licenses, said in a statement.

“But, with every positive step forward, we are also reminded that there are deserving people who have been left behind through no fault of their own," Ford said. "So, even as we celebrate progress being made towards a more inclusive, equitable and just system cannabis licensing system, we must immediately turn our attention to finding solutions that will help those left behind in this process to advance as well.”

The new licenses come just as availability of capital in the regulated marijuana market has shown signs of drying up, with increasing interest rates and a looming recession cooling interest from cannabis investors. Experts told the cannabis trade publication GrownIn they expect social equity licensees to face pressure to sell licenses on the cheap or wind up signing unfavorable operating agreements.

A full list of the businesses issued conditional cannabis dispensary licenses on Friday is available from the IDFPR website, along with next steps for awardees.

Earlier: 185 New Illinois Pot Shop Licenses To Be Released As Judge Lifts Stay