Toi Hutchinson, Illinois Gov. J.B. Prizker’s Senior Advisor for Cannabis Control, spoke with Grown In on Thursday, shortly after Gov. Pritzker signed legislation creating 115 new cannabis licenses and the state began contacting new craft grow, infuser, and secure transport license winners. Hutchinson says there’s more legislation needed to clarify craft grow licenses, regulations for new medical licenses, and that as the industry grows and changes we should expect many more changes from state regulators.
This interview was edited for clarity and grammar.
Grown In: There was no mention of a lottery of the five medical licenses in the press release. Is there a plan for those?
Toi Hutchinson: Yeah, we have to design an application process for that. That’s not done yet.
Grown In: So you have to go through a whole new application process for those?
Grown In: And the press release made no mention of the rescoring for dispensaries and craft grow. Does this new round take into account that scoring?
Hutchinson: We didn’t have rescoring for craft grow.
Grown In: Excuse me. There was a new set of discrepancies that was sent out.
Hutchinson: For craft grow we had four different deficiency rounds.They had four different deficiency rounds that were ongoing. It was a very different situation than what happened on the retail side. Two different teams. So, it was not the same process at all.
Grown In: Oh, there were two different scoring teams with KPMG?
Hutchinson: KPMG had a contract with the Department of Ag and a contract with IDFPR. IDFPR’s was way more complicated. You’re talking about unlimited applications in several different BLS regions for a potential of 10 licenses. That’s what happened first. That’s why we needed to regroup and all of that.
And the fixes for that were found in [just signed House Bill] 1443.
That was not the situation with Ag. What we just released this morning is a result of the original application pool and the original applications, they were never any scores released. So, these are notices of award that were delayed but they were not a part of the same issues that we saw on the retail side.
Grown In: Understood. So, what percentage of craf grow licenses that people are getting notification for today, are veteran-led?
Hutchinson: I don’t know. I would say that the veterans’ points were five points. And so, these are the top scoring applicants. So, I would assume that many of them had all their points.
Grown In: One thing is that craft grow applicants have been complaining about, that there isn’t enough clarity on when and how fast they’ll be able to expand their grow space. Do you have plans to clarify this?
Hutchinson: Yes. [Laughs] I was only answering the question you asked me.
Grown In: Can you give a timeline and maybe some preview of how you’ll clarify it?
Hutchinson: No, that’s going to require legislation so I can’t.
Grown In: Okay. So that does require legislation. You don’t think it could be done through regulation.
Hutchinson: I really don’t know yet. Today we have notes and reports and we just signed a bill that we worked on this last session. So we’re kind of taking things one step at a time.
Grown In: So, even after craft grow comes online, the vast majority of Illinois cannabis cultivation is still going to be managed by a handful of players. I visited Cresco’s Lincoln facility which is well over a hundred thousand square feet. Is this a concern for the state? The aspect of competition between really large players and some small players?
Hutchinson: The industry is changing. I would point to the most growth, you see in the liquor industry is in the craft breweries, that it’s not on the legacy market. Part of the reason why we wanted to look at new entry ramps to the industry was to allow people to come in and be able to create niche products. They have a smaller footprint.
We’ll have to work through all those things as the industry is growing. The conditional phase allows for a year to try to get your business up and growing. What we anticipate is that the cannabis industry today is not going to look like the cannabis industry five years from now. So, our focus is to make sure that whatever it looks like is inclusive of all people who look like us in the State of Illinois.
This is a multi-pronged approach. It will be very complicated and layered. This is a volatile, technical, highly regulated industry that is still federally illegal. So at this point, I’m really excited to see who the new entrants are going to be, so that as we start to figure out what these businesses look like, we can work to create the conditions and allow them to stay in the issue and compete.
Grown In: Illinois cannabis wholesale prices have stayed pretty high, usually around $4,000 a pound. From what we’ve observed, illegal market prices are consistently fifty to sixty percent of legal market prices. How do you as a regulator think about that difference in price between illegal and the legal markets?
Hutchinson: Well, my focus is on the legal market and I cannot regulate that which I don’t control. So, I think about it in a two-pronged fashion. One is Illinois, which is still surrounded by multiple illegal states. So, all the states that have come online in the legal market struggle with our borders. All of us do.
And until there’s a federal fix to deal with the fact that cannabis is already backed legally, like, it’s not a question about whether this is going to be legal or not, we’re operating in a framework right now where the whole debate with federally illegal – so we have this hodgepodge across the country. So that is something that all of us will struggle with until Congress acts.
The other thing is that there is an intentionality behind our equity-focus as to what we use the money from the sale of a plant for. And the tax revenue that we received in the state, a lot of people think that all of it goes into the state coffers like you know, like just go get the money and pay back a lot of bills, and that’s not what we did. Ours goes into community reinvestment and it goes into all the ills that happened as a result of these horrible drug policies over the 90 years.
At a time when all budgets are restricted, the money has to come from somewhere. So, as new entrants come online, as new entry ramps appear, I actually expect the taxes to kind of even out over time and that’s what happens in most states. But fifteen months in after a global pandemic after not knowing kind of sales we were going to have and breaking records every single month we’re for now concentrating on who the new entrants will be, how we can make sure that this marketplace is the most healthy, safely, regulated and inclusive industry in the country. That takes time, it takes effort, and it’s going to take multiple attempts.
Grown In: Is there anything else you want to tell me?
Hutchinson: I’m just really excited because these new licenses that we’ve announced today are 67 percent non-white. At a time in this country where we’re still upwards of eight hundred thousand people are being arrested for cannabis every single year. Normalizing and legalizing activities that the prohibition of the exact same activity destroyed whole communities, we’re starting to turn a corner and I couldn’t be more excited.