Want to Get Involved in the Cannabis Industry?

This article provides an overview of new Illinois laws governing the sale and distribution of cannabis.

The Cannabis Regulation and Tax Act legalized recreational cannabis in Illinois on June 25, 2019. Since January of 2020, customers have been legally able to buy their recreational cannabis from dispensaries. Under the Act, the legal age to purchase cannabis is 21 years old. In Illinois, there are currently 56 licensed medical marijuana dispensaries, 34 of which are also permitted to sell recreational cannabis. These numbers are likely to increase in the future, making cannabis more accessible than ever.

Q: Who can apply for and obtain a license to sell cannabis?

Technically, anyone can apply for a license, but there are a few stipulations. Principal officers of the proposed business must prove they have the knowledge necessary to run a dispensary. Principal officers must also have a comprehensive business plan that functions in accordance with the law. They must also undergo a criminal background check which includes fingerprinting. If the principal officer has a criminal background, the state will more heavily scrutinize their application.

Licensees are selected on a point-based system (on a scale of 250 points) within certain Bureau of Labor Statistics (BLS) regions. 17 BLS regions serve to help distribute dispensaries throughout the state. The regions are based on population and are used to gather employment and wage data. Points are based on the quality of record-keeping and security plans, general business or operating procedures, diversity plans, expertise with cannabis, and Social Equity status.

Social Equity status is meant to promote equal opportunity and diversity in the cannabis industry, and qualifying Social Equity Applicants earn additional points toward their application. Social Equity Applicants are defined as:

1. Those who have at least 51% ownership and control by 1 or more individuals who have lived in a “Disproportionately Impacted Area” by the war on drugs for at least 5 of the last 10 years.
2. Those that have been arrested and adjudicated of any cannabis-related offense (or is a member of an impacted family of such an arrest).
3. Those who have 10 or more full-time employees meeting one of the previous requirements.

*At least one of these requirements must be met for social equity status.

When cannabis was initially legalized in Illinois, the existing medical marijuana dispensaries acknowledged under the Compassionate Use of Medical Cannabis Pilot Program Act were allowed to apply for adult-use retail licenses (allowing them to sell recreational cannabis and to apply to open a second location). These were the first licenses granted.

However, the issuing of new licenses has been very restricted. In May of 2020, 75 more “conditional dispensary licenses” were supposed to be granted in a second wave of licensing (applications were due in January of 2020). The Coronavirus pandemic has pushed the issuing of these licenses back until further notice. There is speculation, however, that these licenses will be issued in late August or early September.

Q: How to apply for a license?

The Department of Agriculture is in charge of licensing for cultivation centers, craft growers, infuser organizations, and transportation organizations.  The Illinois Department of Financial and Professional Regulation (IDFPR) is in charge of licensing for dispensaries.

When available, applicants can apply for a dispensary license directly on IDFPR’s website. Unfortunately, applications are not available at this time. Applications for the second wave of dispensaries closed in January of 2020. While more licenses were expected to be issued by December 21, 2021, in the wake of the Coronavirus pandemic, it is unclear when more applications will be accepted.

Once the application is approved, the 2-year license costs $60,000, or $30,000 if the applicant qualified under social equity.

After receiving their license, licensees have 180 days to identify a physical location for their dispensary. This may be extended another 180 days with IDFPR approval. The license will be revoked if a location has not been determined after 360 days. In some instances, a transfer of BLS regions may be requested to allow for the licensee to find a physical location for their dispensary. It is important to note that dispensaries may not be within 1,500 feet of another dispensary.

Q: Can I grow and sell cannabis, or are those separate licenses? Can I apply for both?

The following information is most relevant for dispensaries that do not grow their own cannabis.

Licenses for growing and selling cannabis are different. The Department of Agriculture controls licensing for growing while licensing for selling is regulated by the Illinois Department of Financial and Professional Regulation.

Currently, a craft grower may share a premise with an infuser or dispensary – allowing operations of different licensees to occur in once place. The IDFPR will then examine this physical space.

Cultivation facilities are not permitted to sell, distribute, or deliver cannabis anywhere other than dispensary organizations or product testing cites (labs that determine the product composition) registered with the IDFPR. Dispensaries are then responsible for counting and inspecting all products received from the transporting organizations before selling them. The cannabis must also be properly packaged to be verified for sale.

Dispensaries cannot refuse to conduct business with eligible growers or transporters. To maintain a variety of products, dispensaries must not have 40% or more of their inventory from a single source. This means that no exclusive agreements are permitted between growers and sellers.

Q: How do I get the product to my dispensary from growers?

Only people with transportation licenses approved by the Department of Agriculture can transport cannabis. The deadline to apply for a transportation license passed on March 15, 2020. Applications will reopen again on January 7, 2021. This application cycle will continue every year to allow for more transportation licensees.

Like with dispensary licensing procedures, a point system is used to determine who will receive a license. Under the Cannabis Regulation and Tax Act, employee training plan suitability, quality of security and record-keeping procedure, quality of the business plan, and Social Equity Applicant status are weighted heavily in consideration for licensing.

Those with transportation licenses are responsible for all transportation of cannabis from cultivation centers and other growers to dispensaries. All transported cannabis must be entered into a data system and kept in approved containers. The transporting vehicle cannot have any revealing or visible information about the cannabis business on it. For example, a marijuana leaf decal would not be permitted.

Q: What if I want to deliver directly from dispensary to customers?

Direct transportation of recreational cannabis to private addresses is currently illegal in Illinois. Lawmakers have mentioned that legislation may be introduced to allow direct delivery in the near future. There has been no official statement on when this legislation might come about, but lawmakers hope that such legislation might discourage the widespread use of black-market cannabis delivery operations.

The information found in this article is largely found in the Cannabis Regulation and Tax Act at https://ilga.gov/legislation/publicacts/101/101-0027.htm.

For more information about Saper Law’s services or for help obtaining cannabis-related licenses, contact Saper Law at 312-527-4100 or book a consultation.