Considerations for New Dispensaries in Preparation for Recreational Cannabis in Illinois

Considerations for New Dispensaries in Preparation for Recreational Cannabis in Illinois

As a result of recent legislation in Illinois, beginning January 1, 2020, recreational cannabis will be legal for those 21 years or older. The Cannabis Regulation and Tax Act defines a dispensing organization as “a facility operated by an organization or business that is licensed by the Department of Financial and Professional Regulation to acquire cannabis from a cultivation center, craft grower, processing organization, or another dispensary for the purpose of selling or dispensing cannabis, cannabis-infused products, cannabis seeds, paraphernalia, or related supplies under this Act to purchasers or to qualified registered medical cannabis patients and caregivers.”

Any person or entity interested in a dispensary license may apply for a license. The license application will involve a competitive process and ranking system of all applications. Licenses will only be issued on a conditional basis, until approved by the Illinois Department of Financial and Professional Regulation. 

License Overview

  • Licenses Issued By: The Illinois Department of Financial and Professional Regulation.
  • Number of Licenses available:
    • Up to 75 licenses by May 1, 2020.
      • NOTE: There are a limited number of licenses available per BLS Region. The BLS Regions are:  Bloomington (1); Cape Girardeau (1); Carbondale-Marion (1); Champaign-Urbana (1); Chicago-Naperville-Elgin (47); Danville (1); Davenport-Moline-Rock Island (1); Decatur (1); Kankakee (1); Peoria (3); Rockford (2); St. Louis (4); Springfield (1); Northwest Illinois nonmetropolitan (3); West Central Illinois nonmetropolitan (3); East Central Illinois nonmetropolitan (2); South Illinois nonmetropolitan (2).
    • Up to 110 licenses by December 21, 2021.
  • Deadlines:
    • For licenses issued by May 1, 2020: applications open no later than October 1, 2019 and are due no later than January 1, 2020.
    • For licenses issued by December 21, 2021: deadlines to be determined.  
  • Approximate Costs:
    • Application: $5,000
    • If approved:     
      • Payment of $60,000, AND
      • Completion of a Social Equity Inclusion Plan. This requirement is an effort to reduce barriers for those impacted by the enforcement of Cannabis-related laws and an investment by a cannabis business of at least $100,000.
    • Renewal:  $60,000 (annually)
  • Licenses Valid Until: March 31 of even-numbered years. For example, if a license is issued February 12, 2020, it will expire March 31, 2022.
  • Applicants Most Likely to be Approved:
    • Those that score the highest in the categories of:
      • “Security and Recordkeeping,”
      • “Business Plan, Financials, Operating and Floor Plan,” and
      • “Status as a Social Equity Applicant.”

Application Requirements

  • Identification of all officers and board members, who must be 21 years or older.
  • Information on whether any principal officer has held or currently holds ownership in a cannabis business, any business or nonprofit.
  • Disclosure of any bankruptcy filed.
  • Disclosure of the number of licenses applying for in every region.
  • Proposed location must not be within 1,500 feet of another dispensary.
  • Estimated volume of cannabis it plans to store.

If you have additional questions regarding recent cannabis legislation and its impact on dispensaries, contact Adam Fayne (Adam.Fayne@saul.com) or Robin Dusek (Robin.Dusek@saul.com) at Saul Ewing Arnstein & Lehr LLP.

*The authors of this article would like to thank Diana Arroyo for her contributions.

 

DISCLAIMER: Per federal law, marijuana is a Schedule I controlled substance. This means that it is a federal crime to sell, distribute, possess, and/or use marijuana or marijuana-derived products, regardless of any state law that may authorize certain marijuana activity. Although federal policy may, at times, recommend enforcement discretion when a business or individual is in compliance with state marijuana law that is deemed to comply with federal enforcement priorities, it is important to understand that compliance with state law does not equal compliance with federal law, and that federal marijuana policy may change at any time. No legal advice we give regarding marijuana law or policy is ever intended to guide or assist clients in violating federal law.

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