Illinois Awards First 5 'Same-Site' Cannabis Dispensary Licenses

CHICAGO — The first licenses to sell recreational marijuana in Illinois were awarded to five existing medical dispensaries operated by the same Chicago-based company. The first "same site" adult-use cannabis licenses would go to the locations operated by Green Thumb Industries in Mundelein, Joliet, Naperville, Canton and Effingham, the Illinois Department of Financial and Professional Regulation announced Thursday — but not all of those locations may be able to offer cannabis products to anyone 21 and over starting in January.

Each existing dispensary may also open a second site for non-medical use at a different location, under the terms of the Cannabis Regulation and Tax Act signed into law by Gov. JB Pritzker in June. As local governments establish zoning regulations for retail recreational marijuana locations, state regulators said they expect to receive more applications for "early approval adult use" licenses, which are available only to the 55 existing licensees with medical cannabis dispensaries.

"This provision was intended to ensure that the State has at least a minimum number of facilities operating on January 1, 2020, and to maintain the current medical cannabis facilities so they can continue to provide products to patients in the medical program," according to a letter to Pritzker from Rep. Kelly Cassidy and Sen. Heather Steans, of Chicago, warning the success of the program was being threatened by the state agency's interpretation of the law they drafted.

A same-site license does not necessarily permit the sale of cannabis to those over 21 come Jan. 1, 2020. The act legalizing cannabis leaves it up to local governments whether to ban the sale of recreational marijuana, so municipalities that have existing medical dispensaries may, through their zoning code, block that dispensary from selling to non-medical card holders. That may happen to at least one of the first five licensees announced by the state.

Naperville's City Council has been divided on whether to allow recreational sales. At a marathon meeting last week, council members backed off approving an earlier resolution that would have banned recreational cannabis. A citizens group called Opt Out Naperville has called for rallies Saturday and ahead of the Tuesday City Council meeting against allowing adult-use cannabis to be sold within city limits.

Joliet officials told Patch they do not foresee problems with the expansion of the Green Thumb Industries locations in town, where they are branded 3C Compassion Care, and the City Council will develop a set of zoning regulations allowing adult-use cannabis.

Canton, a town of about 15,000 about 30 miles southwest of Peoria, will welcome the recreational sale, its mayor told the Chicago Tribune. Effingham and Mundelein have yet to decide whether to move toward allowing recreational sale. According to the Daily Herald, Mundelein village trustees are set to debate the issue at their next meeting Sept. 23.

According to the sponsors of the legalization bill, the Department of Financial and Professional Regulation, as recently as July, told current medical license-holders that they would be able to relocate the medical dispensary while keeping their ability to apply for a recreational license. But in early August, Steans and Cassidy told the governor, IDFPR changed its tune and began interpreting the law to only allow same-site licenses to places that kept the exact same address.

"Numerous municipalities with medical dispensaries have opted to prohibit marijuana sales or intent to opt out [in] the coming weeks or months," Cassidy and Steans said. "As a result, a significant number of medical dispensaries that intend to provide adult use will be forced to relocate. But under the agencies new interpretation, these dispensaries cannot relate or can relocate medical and forgo adult use sales. As a result, a significant number of dispensaries will be unable to provide adult use and some may be ill equipped to deal with adult use sales on January 1st."

Pritzker responded on Aug. 27, saying the IDFPR must balance the early expansion of existing medical dispensaries with ensuring that they do not "completely dominate the new market before new dispensaries can enter the market in July 2020." Dispensaries that are blocked from a same-site license by the zoning of their existing medical location, the governor pointed out, are still permitted early access to the recreational market by opening a secondary site.

"At this time, the Department does not know how many medical dispensaries will not have the opportunity to operate at their current sites as many municipalities are still considering how to proceed," Pritkzer said. He said IDFPR would continue to monitor the issue and may consider solutions once there is a better understanding of "the scope of the problem."

The possession and private consumption of cannabis becomes legal on Jan. 1, but application deadlines are kicking in. Non-medical licenseholders have from Oct. 1 to Jan. 1 to apply for recreational permits. The act requires the Department of Financial and Professional Regulation to grant or deny applications for same-site licenses within 14 days of receiving a completed application. There are no time requirements for the department to grant second-site applications, which will be reviewed in the order they are received, according to the IDFPR.

The existing medical cannabis market is tightly regulated by the state. For instance, the Illinois State Police conduct monthly inspections of all 55 dispensaries and cultivation centers and even have the ability for live access to surveillance cameras covering any angle of any room where cannabis is kept at any one of the state's dispensaries. The regulation of the dispensaries will remain similar for the adult-use license holders, and the product will be identical. The primary difference will be taxes — medical card holders are taxed around 1.5 percent while recreational users will be assessed up to about 40 percent in tax.

Local governments can assess their own additional cannabis tax of up to 3 percent starting in Sept. 2020, according to a "municipal government toolkit" provided by the offices of legalization co-sponsors Cassidy, Steans, Sen. Toi Hutchinson and Rep. Jehan Gordon-Booth. But they warned municipalities of the importance of allowing the new legal market to gain traction as prices often drop on the illicit market to maintain market share.

"Proceed with extreme caution and avoid immediately taxing to the cap. We are already near the high middle end of tax rates around the country, and it’s vital to allow the marketplace to mature before increasing tax rates," they said. "It is anticipated that it will take up to 5 years before the market is fully mature, so a taxation strategy should take this into account to avoid negatively impacting consumer movement into the legal marketplace and counterproductive taxation strategies."

Because the businesses that already have valid licenses are presumed to be in compliance with the law, the early approval licenses the medical industry is eligible for are not being "scored" by state regulators using a points formula. But later applicants will be evaluated by the IDFPR on a series of factors — security, business plan, society equity applicant status, employee training, the owners' status as a veteran or an Illinois resident and labor, diversity and environmental plans. Applications for non-medical dispensaries are available Oct. 1, due by Jan. 1 and will be awarded before May 1, 2020.

The five Green Thumb Industries-owned medical dispensaries to receive early approval licenses for dual recreational and medical use were:

• The Clinic Mundelein, 1325 Armour Boulevard, Mundelein
• 3C Compassionate Care Center – Joliet, 1627 Rock Creek Boulevard, Joliet
• 3C Compassionate Care Center – Naperville, 1700 Quincy Ave. #103, Naperville
• Salveo Health & Wellness Dispensary, 3104 N. Main St., Canton
• The Clinic Effingham, 1101 Ford Ave. Ste. C, Effingham

"GTI is thrilled that our five stores received the state of Illinois’ first approvals for 'same-site' adult use cannabis licenses," said Linda Marsicano, spokesperson for Green Thumb Industries. "We look forward to continuing the excellent partnerships we have in the communities we serve across the state."

In Illinois, Green Thumb operates cultivation centers in Ogelsby and Rock Island. It trades on the Canadian Securities Exchange. Earlier this year it acquired the "luxury" marijuana brand BeBoe, and last week it closed a deal for one of New York's 10 cultivation license holders and received a cultivation licenses in Ohio. It describes itself as a "leading national cannabis consumer packaged goods company and owner of Rise™ and Essence retail stores."

The company announced Tuesday it would start holding weekly office hours, Wednesdays from 1 to 4 p.m. its headquarters at 325 W. Huron St. in Chicago. It will offer its in-house license application team to offer free private consultation and group sessions, calling it the Illinois Social Equity License Application Assistance Program, or LEAP.

"At GTI, we believe it is part of our corporate responsibility to help reduce barriers to cannabis business ownership for minorities and others most impacted by the war on drugs," GTI Senior Vice President of Government and Regulatory Affairs Dina Rollman said, announcing the program.

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