Illinois Cannabis Legalization & Winning a Cannabis Business License in 2020
For hopeful cannabis businesses in Illinois, 2020 is promising to be an important year. Legislation passed in May 2019 means it will soon be legal for adults to buy recreational marijuana in the state starting in early 2020. As the story develops around Illinois cannabis legalization, cannabis business owners are gearing up to compete for licenses in the state.
While there will be some truly exciting opportunities for new cannabis dispensaries and vertically integrated cannabis businesses, there are still numerous challenges ahead.
To give yourself the best possible chance of winning a license in this new (highly competitive) landscape, cannabis businesses must get up to date on the newest Illinois cannabis legalization – and we’re here to help.
Illinois Cannabis Legalization: What’s New
Until recently, marijuana was only legal in Illinois for compassionate medical use. At the end of May 2019, however, House Bill 1438 was passed, which legalized the possession, use, and purchase of marijuana by anyone over 21. The law goes into effect from January 2020.
HB 1438 was passed entirely through the state’s house and senate with no vote by the people. In fact, legalizing the sale of cannabis in this way – through state legislation with the governor’s approval – hasn’t happened in any other state.
With the new adult-use bill going into effect in January 2020, applications for adult-use cannabis businesses will be accepted from December 10 to January 2. Holders of medical licenses had an opportunity earlier this year to expand into the adult-use market by converting or co-locating.
Social Equity Is Opening Doors
Another important development in Illinois cannabis legalization is the Social Equity Program for license applicants. This program aims to reduce the barriers that have previously prevented impacted people from entering the cannabis industry. Not only will this program help provide SE applicants with access to low interest government loans, it will also reduce application and licensing fees by 50% for qualifying social equity applicants who own at least 51% of their business.
Along with the requirements that a Social Equity Applicant must be a resident of Illinois, you’ll need to meet one of the following three specific criteria:
- Applicants must have lived in a state-designated disproportionately impacted area for 5 of the last 10 years.
- The applicant (or a member of his or her family) must have been arrested for a cannabis-related charge that is eligible for expungement pursuant to HB 1438.
- If the company has more than 10 employees, at least 51% of them must meet one of the above criteria.
The Social Equity Program is an important step of the application process and carries significant weight with a potential 50 points being allocated to the Social Equity Applicant criteria.
Illinois is acting as a pioneer in the marijuana industry. Depending on its success, Illinois cannabis legalization may very well pave the way for how other states set up their adult-use cannabis programs.
Racking Up Points for Your Application
In January 2020, only 75 Conditional Adult Use Dispensing Organization Licenses will be available – and 47 of those will be based in Chicago. To maximize your chances of success, you’ll need to ensure your application banks as many points as possible.
Ultimately, who will be awarded a license in Illinois will come down to a matter of mere points.
There are a total of 250 available points. Qualifying for the Social Equity Program is worth 50 points – that’s 20% of the entire application! Therefore, if you do not qualify for the Social Equity Program yourself, it will be critical to have someone on your team who does qualify and who can represent 51% of the business.
A thorough floor plan will be worth a portion of 65 points. This is something many cannabis business applicants can overlook if they don’t yet have a property secured.
Additionally, there are several optional areas of the application, but they are worth a significant number of points – and therefore should not be considered optional when you’re filling out your application. Earning those extra points can make the difference between success and failure.
Understanding what is of priority to Illinois and tailoring your application to meet those requirements will give you the greatest possible opportunity to win a license in 2020.
Illinois is quickly proving that it’s not going to follow other states and, instead, it’s reinventing its own cannabis licensing system. For example, while other states provide a heavy emphasis on community engagement and support, those criteria are worth just 2 bonus points on the Illinois application.
Another obscure fact about the Illinois dispensing organization license application that is throwing a curveball at applicants is that there is no requirement to have an actual location at the time of application. If you win a license, you have 180 days to secure a property.
However, providing a thorough floor plan is worth a significant number of points.
Despite these oddities with the Illinois application process, there are ways to embrace the parameters and boost your chances of success in this extremely competitive market.
Give Yourself the Best Chance
Illinois cannabis legalization is ushering countless opportunities into the state, but there will be tight competition. To maximize your points and your chances of success…
- Get a cannabis-specific CPA. Even if your CPA is out of state, managing the books and taxes for a cannabis business is a unique beast to wrangle.
- Have a solid business plan. As much as possible, plan out every detail of your future cannabis business.
- Provide as much detail as possible about your financial plans for the business.
- Despite the fact that having a property secured is not required for the Illinois adult-use dispensing organization license application, take the time to create a very real, practical floor plan.
- Secure a security contract and provide details of your security provider and plan.
- Maintain – and wherever possible, display – immaculate record-keeping.
- Fill out all of the optional areas of the application, including Veteran Status (if applicable), Labor and Employment Practices, and Environmental Plan.
- Do your best to qualify for the Social Equity Program. Without those 50 points, it will be nearly impossible to win a license. Have someone on your team who meets the criteria.
- Don’t try to go at it alone. The application process is complicated and competitive. Working with expert consultants like those we have here at Higher Yields Cannabis Consulting will allow you to tap into the experience that you and your team don’t yet have.
The process of applying for a license might seem daunting, but remember this: 75 cannabis businesses in Illinois will be awarded licenses to open an adult-use business in 2020.
I want one of those licenses to be yours.
At Higher Yields Cannabis Consulting, we can help you along the journey by equipping you with the expert guidance and support you need to get started in this new and exciting industry.
To find out how we can help, reach out to us to schedule a free consultation.