Last week I had a great trip to Illinois and was able to spend time with current and prospective operators, cannabis legal professionals and cannabis consultants. During my meetings, I heard a common theme: the state of Illinois is trying to be the leader in social justice in awarding adult-use cannabis licenses and in providing support programs for certain applicants.
Since Illinois Governor J.B. Pritzker signed legislation in June 2019 that makes adult-use cannabis legal — the bill, HB 1438, goes into effect Jan. 1, 2020 — Illinois has been moving quickly on many fronts.
In late September 2019, Pritzker’s Administration released maps that designate areas they are considering “disproportionately impacted areas” for cannabis program’s social equity applicants. According to the administration, more than two million Illinoisans live in a disproportionately impacted area.
On October 1, 2019, applications to operate a marijuana dispensary were made available and they are due between December 10, 2019, and January 2, 2020. Qualifying social equity applicants will be awarded 50 points out of 250 total points-based scoring system.
To qualify as a social equity applicant, you must be an Illinois resident and fulfill at least one other criteria, including:
- At least 51 percent ownership and control by one or more individuals who have lived at least five of 10 years in a disproportionately impacted area.
- At least 51 percent ownership and control by one or more individual [or family member of an individual].
- Applicant has been arrested for, convicted of or adjudicated delinquent for an offense that is eligible for cannabis expungement.
- Applicants with the minimum of ten full-time employees must have at least 51 percent of employees who currently reside in a disproportionately impacted area or have been affected by cannabis-related offenses.
Also, applicants who qualify as social equity applicants will receive opportunities for grants, technical assistance, low-interest loans and fee reductions and waivers. Later this year, the Department of Commerce and Economic Opportunity (DCEO) will launch a $20 million low-interest loan program to qualified social equity applicants to help defray the start-up costs associated with entering the license cannabis industry.
It is imperative that applicants understand the organizational structure, initial capital requirements, the impact of 280E on cash flow, and general accounting compliance questions. Bridge West has been working with Illinois applicants and their cannabis advisors since the application first become available. With more than ten years of data from our cannabis clients, our experienced advisors help applicants navigate the financial modeling area for an adult-use cannabis dispensary. We work closely with applicants to help them move quickly through these items so they can focus on other sections of the application and ensure they receive the maximum points possible.
If you are one of the lucky applicants to be awarded a license, you will need to ‘put the coffee pot on’ as the real work will now begin. The unique challenges within the cannabis industry will soon become reality before you make your first sale. There are many items that will need to be addressed, finalized, and implemented as soon as possible, including banking, insurance, payroll service, merchant processing, employee hiring and training, and local community relationships, just to name a few! These are not impossible items to take care of but will require a significant amount of time and effort, and you need to surround yourself with a team of advisors with cannabis industry experience. The Bridge West team has been helping cannabis clients with these areas since 2009.