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Marijuana Laws in Illinois: Maximizing the Odds of Winning a License
A few years ago, Illinois limited their medicinal marijuana cultivation licenses to fewer than twenty. Recently, the state’s newest governor, J. B. Pritzker, has begun to open up the marijuana laws in Illinois to allow for more licenses – meaning more opportunities for growers, manufacturers, and retailers.
While state markets like Colorado and California are relatively easy to break into, other states like Florida, New York, New Jersey, and Illinois are notoriously competitive, which makes winning a license in the Prairie State an arduous feat.
As a native son of Illinois, I and my team of consultants have been keeping tabs on the marijuana laws in Illinois and have created a guide of recommendations for anyone going for a license in my Midwest homeland.
Here are the factors affecting your ability to secure a cannabis business license and the marijuana laws in Illinois that influence your odds.
Ever-Changing Marijuana Laws in Illinois
According to reports from CBS News, as recent as Tuesday, June 25th, Pritzker signed legislation making Illinois “the 11th to legalize small amounts of marijuana for recreational use and the second to approve it through the Legislature rather than the ballot box. The bill, Illinois HB 1438, goes into effect Jan. 1, 2020.”
This shockwave legislation is good news for cannabis-minded business owners. As the recreational market begins to creep open, more licenses for various types of marijuana businesses will become available. When applying to win your license and building your business plan, think about the trends in Illinois legislature and anticipate the changes that are likely to come in the next 3 to 5 years.
Know the Demographics
When it comes to votes, Chicago runs Illinois due to the dense population. While Chicago is a left-leaning progressive city, many of the state’s suburban and rural communities are more conservative. Despite the heavy prevalence of farm and agriculture throughout the state of Illinois, many rural citizens still aren’t quite on board with the marijuana movement.
As a result, most of the marijuana business licenses that will be awarded will be limited to operations in Chicago. While there will be up to 190 licenses allowed for the entire state of Illinois by the end of 2021, a vast majority will be limited to the Chicago metropolitan area due to the population and demographics.
When planning your cannabis business and, in particular, hunting for the perfect property, consider where you have the best odds of winning a license.
Know the Preferences
In any state, there are certain preferences given to cannabis business owners based on the experiences and perspectives they bring to the industry. In some states, preference is given to military veterans, for example. Pritzker’s new legislation “gives cannabis-vendor preference to minority owners and promises 25% of tax revenue from marijuana sales to redevelop impoverished communities.”
Preference is also often given if a member of your team has experience running or obtaining a license for a cannabis business in another state.
Overall, Illinois is extremely specific in its qualifying conditions that applicants must meet to win a license. The marijuana laws in Illinois have necessitated a system based on merit, which means applicants are awarded points for checking off specific boxes on the qualifying conditions list.
Know the Supply & Demand
As marijuana laws in Illinois loosen, opportunities for vertically integrated operations are also opening up. However, until the market becomes more lucrative, it’s prudent to check your business plan against the supply and demand of the state economy.
For example, in Illinois retail licenses are easier to get and the market is in dire need of more cultivators. As a result, Illinois will likely open up more cultivation licenses in the next few years to meet this demand, which will make it easier to break into the market if you design your business around cultivation first and plan for vertical integration later.
Give Yourself the Best Odds
When preparing for your license application, give yourself the best odds by planning ahead. Follow these guidelines for maximizing your chances of winning that critical piece of paper.
A Guide to Maximizing Your Merit
- If possible, go for medical over recreational. As Illinois breaks into new territory with the legalization of recreational marijuana, the competition can be fierce. A more strategic move may be to go for a medical marijuana license first, which is easier to obtain. Medicinal marijuana businesses are given preference when applying for a recreational license after a few years, making it a smart long-game move.
- Start early. As soon as the request for proposals (RFP) is released, applicants have to move quickly. Plan for the green light by getting as much of your application done ahead of schedule, such as sections pertaining to real estate, financing, your team, and your cannabis experience. Confer with a cannabis business consultant early to give yourself the best runway to launch your business.
- Have a contingency plan. Having a rigid vision for your cannabis business can only hurt you in today’s market. Keep your mind open to variations of your ideal operation as your business plan may need to change depending on the licenses and resources available.
- Meet the minimum financial requirements. For non-cultivation businesses, marijuana laws in Illinois require that you have at least $400,000 in liquid assets and $50,000 in escrow when your application is submitted. Cultivation businesses may require upwards of $500,000 in liquid assets. Focus on pulling together those funds early, then maximize your capital once you’ve hit the minimum.
- Tap into the community. Most states prefer to grant licenses to cannabis businesses that have a plan to give back to the community. If you can show a history of charitable contributions or volunteering from the members of your team, you increase your odds significantly.
If you need help putting together your pre-application packet, let us know. We’ll help you by conducting a pre-app assessment and identifying your strongest opportunities for winning a license in Illinois.
Have questions about the marijuana laws in Illinois? Let us know in the comments below.