Chicago loves cannabis tax revenue but passively discourages new dispensaries

Chicago established seven zones for new cannabis dispensaries in 2019, but most zones have seen no new businesses since their creation.

As a deadline looms for Illinois’ medical cannabis dispensaries to site their second recreational retail location, many dispensary owners say Chicago locations are out of the running because there’s not enough return for the bureaucratic headache.

According to state law, by March 31, 2021 Illinois’ medical cannabis dispensaries must site their second recreational retail location or risk losing that license. Last November, the Chicago Zoning Board of Appeals awarded 31 new cannabis dispensary permits over seven zones across the city to existing license holders. Of that group, only seven permits have been used and built.

Holders of ten unused Chicago permits told Grown In last week they have no plans to further pursue siting dispensaries in Chicago because of either bureaucratic holdups, or aldermanic indifference to putting a dispensary in their ward.

“Many suburbs are eagerly encouraging operators to come to their towns and are working cooperatively to find the most suitable location for the business and the community. These suburbs have a simple and straightforward zoning process. By contrast, the city designed an unpredictable lottery, restricts operators to certain zones, and also layers on a cumbersome special use permit process,” said Green Thumb Industries’ Vice President of Communications Linda Marsicano. GTI won four city permits, more than any other organization. 

Other dispensary owners told Grown In that not only does Chicago city zoning bureaucracy slow down the process, but city aldermen, who are usually the ones to usher development projects forward, aren’t incentivized to support cannabis dispensaries.

“The aldermen don’t get any win out of it. Yeah, the city needs the tax revenue, but why am I going to stick my neck out? ‘It’s some rich white guy or whatever,’” said one cannabis dispensary operator who asked to remain anonymous. “Whereas a suburban community is going to get some real tax revenue.”

Many aldermen are also under community pressure to block cannabis dispensaries that are majority white-owned, say dispensary owners, which describes every Illinois license holder today.

Meanwhile, cannabis dispensary construction is booming in Chicago’s suburbs, which unlike much of Chicago are car-oriented with vast parking lots, and local leaders eager to add cannabis tax revenues to their coffers.

“Density plays a big role. Maybe some of the guys that went on Randolph Street [NewEra and Dispensary 33] knew something. Parking plays a big role. It’s like the restaurant world. If you have the space, with 200 parking spaces, that’s the possibility of 200 people,” said another cannabis dispensary operator, referring to two new dispensaries approved in Chicago’s West Loop last week.

Irony abounds for Chicago, since earlier this week Mayor Lori Lightfoot cited increased cannabis tax revenues as the reason for avoiding major city layoffs. Yet, earlier this summer the Mayor fired her senior staffer in charge of cannabis issues, without identifying a replacement.

“Multiple dispensaries have secured approval with two more scheduled for formal review this week..The City will continue to maximize opportunities for cannabis industry expansion that includes robust public engagement and input,” Chicago Planning Department spokesperson Peter Strazzbosco wrote to Grown In.

“Dedicated staff from the Mayor’s Office and personnel from multiple departments continue to work on cannabis-related issues.”

While dispensary operators tell Grown In that a new location could be sited and opened in much less than four months, they complain that Chicago’s municipal hold ups are the biggest issue. For instance, Chicago ordinances say dispensaries must be sited in a site zoned B-2, B-3, C-2, C-3, or DX, classifications not often found in available properties in heavily trafficked areas appropriate for a retail location.

As a result, dispensary license holders must obtain the approval of first the Chicago Zoning Board of Appeals and then the City Council, a laborious process that also requires first holding a broadly promoted public meeting with the local alderman. Suburban approval is usually much quicker, sometimes requiring no more than a village board meeting.

“The idea originally was that cannabis should be fighting for spots in Chicago because they are so coveted. But if you look at the actual revenue, the reality is that [the suburbs] have parking and quicker access to market,” said John Daley, a lobbyist that represents multiple dispensaries in Chicago City Hall.