According to advocates, industry leaders, and legislators interviewed by Grown In, the State of Illinois has provided no guidelines for when over 700 cannabis dispensary applicants will learn who will obtain one of the 75 dispensary licenses created by passage of the 2019 Illinois Cannabis Regulation and Tax Act. For applicants left in limbo, the best guesswork available is that licenses won’t be awarded by the state until mid-June at the earliest, and most likely not until late July, or possibly early August.
Grown In made multiple attempts to obtain comment from state officials and Governor J.B. Pritzker’s office for this article. However spokespersons from the state either did not respond to requests, or did not provide comment within the multiple day deadlines provided.
It’s right there in the Illinois statute, 410 ILCS 705/15-25, paragraph (a), “The Department shall issue up to 75 Conditional Adult Use Dispensing Organization Licenses before May 1, 2020.” Expecting an award by May, over 700 applicants submitted paperwork and paid application fees by January 2, 2020 – sometimes as much as $5,000 – with over 4,000 license applications for one of 75 cannabis dispensary licenses distributed across the state.
Except then on April 30, deadline day, Governor J.B. Pritzker issued Executive Order 2020-34 that vacated the deadline, saying, “This statutory provision is suspended only with respect to the requirement that such licenses be issued by May 1, 2020. IDFPR shall provide notice to the public of the date such licenses will be issued.” Three weeks later, there’s been nary a peep from the state on when applicants should expect an answer. Not the Illinois Department of Financial and Professional Regulation, not the Governor’s Senior Advisor to the Governor for Cannabis Control Toi Hutchinson, nor from Gov. Pritzker.
“The state is not giving me any concrete dates, I don’t think they’re giving anyone concrete dates because they don’t want to be held to those dates,” says Edie Moore, Executive Director of Chicago NORML.
“Because of the coronavirus pandemic and sheltering in place, we’ll be lucky to have them by June 1,” said Pamela Althoff, Executive Director of the Cannabis Business Association of Illinois.
“I don’t have facts on that. Just as the Administration has said little to the public, is what they’ve said to me as well,” says State Rep. Kelly Cassidy (D-14), author of the 2019 law that legalized the Illinois cannabis industry. “I had that date [April 30] in my calendar almost like Christmas, because I was so eager to see what the outcome of the process would be.”
The one piece of information the public does have is that some applicants have begun to receive deficiency notices from IDFPR.
“As long as people are receiving those, because there’s a 10-day response period, we’re at least that amount of time away from an announcement,” says Moore.
As of Wednesday, some applicants were still receiving notices, “I haven’t received one yet,” said Anton Seals, Jr., an applicant with Organic Urban Revitalization Solutions (OURS), “So I suppose that’s good news.”
A Costly Extra Wait
The wait is hard on applicants, especially smaller, independent organizations that have to satisfy the application requirements for a secured location, and have potentially hundreds of dollars of capital ready to build out a new dispensary.
“The delay is absolutely causing applicants to incur unexpected expenses,” says SmithAmundsen attorney Michael McGrory, who represents multiple applicants. “Many applicants want to be able to hit the ground running once licenses are awarded, and as a result already have payroll that must be met, property expenses that must be paid, debt that must be serviced, et cetera.”
Independent applicants, who are counting on investors to cover costs, now have to deal with skittish investment partners, says OURS’ Seals. “Working toward a goal and being halted through no fault of our own. Watching the general market thrive while we are left to scramble for resources and added stamina to keep going. The cost is immeasurable.”
Deficiency notices may tell applicants they need to clarify aspects of the application, such as operating agreements with social equity partners, or ownership and control details between partners. If an applicant does not respond within ten days, IDFPR will disqualify the applicant from further consideration.
After IDFPR has eliminated some applicants that fail to respond to deficiency notices, there will still likely be hundreds of applicants for the 75 dispensary licenses. How that is resolved is also somewhat unclear.
A Binary Point System
To determine application winners, the state announced in Fall 2019 a scoring system awarding up to 250 points for ten criteria, such as the business plan, diversity plan, and social equity applicant status. However, in a response to questions issued by IDFPR last November, officials stated that points would be awarded on “a binary basis” for multiple categories, such as diversity plan, social equity, and community engagement.
This system, as opposed to allowing application reviewers to award partial points, or even fractions of a point, means large groups of applicants will end up with similar point totals. And because the stakes for winning an application are so high, many applicants have the resources to ensure they obtain as many points as possible.
But then, on December 9, less than a month before the application deadline, the IDFPR announced an emergency rule defining the tie breaking process, stating, “If, at the conclusion of the scoring process period, there are two or more eligible applicants, the Department may distribute the remaining available licenses by lot.”
To applicants and observers, the publicly announced system seems to be a recipe for many tiebreakers. Perhaps another solution is in the works, but in the absence of information, conjecture rules the day.
“One thing I talked to Toi [Hutchinson] about was that during the leadup to applications, there was not a lot of information being shared,” said Chicago NORML’s Moore. “Now it seems like a curtain went down, after the applications were submitted, once those deadlines were pushed back.
“[Toi] said [to me], ‘There’s nothing to say. This is all now procedural and administrative, there is nothing being legislated.’”
