Amid Pot Shop License Legal Limbo, Simpler Process Proposed

CHICAGO — The process to apply for a license to operate as a marijuana dealer in Illinois is going to get a lot simpler this year, state regulators announced.

New rules to be proposed by Gov. J.B. Pritzker's administration would reduce the cost of applications, limit the number of times the same people can apply, and allow applicants to file online, according to the Illinois Department of Financial and Professional Regulation.

Regulators must issue at least 50 new licenses by the end of the year, according to the Cannabis Regulation and Tax Act, a June 2019 law that legalized the possession, use and retail sale of "adult-use" cannabis in Illinois starting in 2020.

Department officials announced Tuesday they plan to open up applications for 55 new licenses "during the late summer or early fall of 2022, depending on when the rules become permanent."

Everyone who submits an approved application will take part in a lottery, the date of which will be announced "in the coming months," according to state regulators.

Winners will have 45 days after the lottery to prove that they are eligible. If a lottery winner fails to meet the eligibility criteria, the department will offer it to the next on a list of applicants drawn after the initial 55.

To be eligible to receive a pot shop license from the state, businesses must be at least 51 percent owned and controlled by people who have lived for at least five of the last 10 years in a "Disproportionately Impacted Area" (map), or be 51 percent owned by people who have been arrested or convicted for low-level cannabis offenses or are members "of an impacted family."

Others can qualify "by meeting alternate criteria," which state officials said would be explained in the future, along with the new lottery rules.

Mario Treto, acting secretary for the Department of Financial and Professional Regulation, said state officials hope to allow more people to participate in the recreational cannabis industry and encouraged feedback about how it is working.

“We are committed to an inclusive and equitable cannabis program that continues to build on its successes while also recognizing and taking steps to improve it further,” Treto said in a release.

When adult-use retail cannabis launched in Illinois in January 2020, the only operational dispensaries were the existing 55 medical marijuana retailers. The holders of those licenses were all granted the opportunity for a second location.

More than two years later, those are the state's only 110 pot shop permits.

Despite legislation passed last year that allowed for more than 300 new dispensary licenses — and lotteries that assigned 185 of them — a court order has blocked state officials from physically awarding them to the winners while a consolidated court challenge is being heard in Cook County. The next court date in the case has been set for March 24.

Pritzker said feedback from stakeholders over the past two years informed the proposal to simplify applications and "is continuing to make Illinois’ growing cannabis industry the most equitable in the nation."

There are currently no Black-owned cannabis dispensaries operational in Illinois, with a handful of multi-state operators dominating the lion's share of the market.

“From day one, Illinois has been dedicated to leading the nation in an equity-centric approach to legalizing cannabis," Pritzker said in Tuesday's announcement of the impending release of new application rules, "and these proposed changes to the application process will make it much easier for social equity applicants to pursue licenses.”

On Wednesday, advocates for Black and brown cannabis business owners held a news conference to call for license-winners to be awarded their licenses and for new laws to support cannabis craft growers and the consolidation of cannabis regulations into a single state agency.

Related: Social Equity Applicants Urge Pritzker To Hold Pot Shop Lottery

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Kiana Hughes, executive director of the Chicago chapter of the National Organization for the Reform of Marijuana Laws, called for state lawmakers to pass pending legislation aimed at helping small businesses in the cannabis industry.

"Time is of the essence, we have a very short period of time to get a lot of things done. However, there's been a very long period of time where we've been waiting for things to get done," Hughes said at the news conference. "So this is very important, and we implore everyone, talk to your legislators, put some pressure on these people, these are your elected officials, and if you're ready for things to change you have the power to do that."

There are about $2 billion in underground sales, according to estimates from industry analysts, which has been driven in part by the high price of legal marijuana at those 110 dispensaries. Even before state and local taxes — more than 40 percent in some jurisdictions — the pre-tax price of legal and taxable marijuana flower in Illinois is higher than any other state in the country.

Rickey Hendon, a former state senator and one of the winners of last year's pot shop lotteries whose license is held up in court, praised the new simplified application process. Speaking at Wednesday's news conference, he said making it easier for people of color to apply would promote true social equity and bring more revenue to state coffers.

"The state of Illinois is losing $1 billion a year in state tax revenue. The state, the county, the city: a billion dollars a year — those of us, when we're open, we will pay our taxes which will cut into that — but that billion dollars in underground market, you've got more weed than ever before. The weed man now has a menu for your bud," Hendon said.

"The only way you going to stop the loss of the billion dollars is to let us open," he added. "Because Black people, especially, will not go to dispensaries, because they know there are not any owned by our people."

Related: Illinois Pot Sales Decline After Record-Setting December