Although Illinois has been barred by an ongoing lawsuit from transferring ownership of 185 new adult-use cannabis dispensary licenses to lottery winners, that hasn’t slowed down the state’s license market. While no deals have been inked yet, brokers, attorneys, and buyers Grown In has spoken to report going rates for dispensary licenses anywhere between $3 million and $8 million, while craft grow licenses – which have been transferred to owners – are going for between $5 and $10 million.
Markets for both dispensary and craft grow licenses have been very fluid, say sources, because the lawsuit holding up licenses, WAH v. IDFPR, keeps getting extended. But, even though the judge overseeing the case has suggested that he might require the state to redo the entire license lottery process, that hasn’t stopped license holders from trying to do deals.
“What I’m not hearing a concern with is the pending lawsuit and the various contingencies the fact they are conditional licenses. I’m not hearing that. People seem to be OK with contingent deals,” said David Ruskin, a cannabis attorney with HMB Legal Counsel.
And it’s not just deals moving forward. Wednesday Block Club Chicago reported one dispensary license winner is moving forward with building out an expensive property in Chicago’s Wicker Park neighborhood.
While there are many winning teams – all of whom first formed in December 2019 – who want to keep their licenses, the drum beat of court delays is making it harder for teams that aren’t already allied with an existing operator.
“The delay in this whole process has created problems for them to formalize their teams,” said Nick Gastevich, a prospective license buyer with V. Gastevich Investments. “Keeping a team in place for years has created a challenge. I think there will be more that will try to sell their licenses.”
Craft grow licenses cannot be legally sold until 2022, while dispensary licenses are not allowed to be sold until they are certified operational by state regulators. Even so, attorneys and brokers advising dealmakers warn it will take some time for deals to go through regulatory approval.
“A while. Months definitely,” said Bryna Dahlin. A cannabis attorney with Benesch, Dahlin is concerned about the state’s, “number of attorneys and throughput. Very concerned about that. Because there are going to be many license holders looking to sell. The approval process is substantial. Just looking at what’s required for the licenses that already do exist. There’s lots of documentation required, and there’s a lot of fact checking. These aren’t rubber stamps.”
While multi-state operators (MSOs) interested in entering Illinois are pushing up prices for dispensaries, there are also MSOs looking at craft grow licenses with an eye to using those as a foothold to becoming vertically integrated in the state.
I think the real challenge is if you could co-locate them. The biggest issue is three craft grow [licenses] is a lot of capital outlay. Only certain people have that kind of cash,” said Akele Parnell, “If you can co-locate them, which I think the state will allow us to do soon, then you’ll see more of that.” Parnell is a member of a craft-grow license team and a partner in the Cola Group, which provides operational and financial support to social equity license winners.
Illinois does not allow entities to have ownership in more than three craft grow licenses. So far Illinois regulators have awarded 38 craft grow licenses, but the state has signaled that it plans to issue 60 more by the end of 2021.