“It’s tough right now, even for people who have a rolodex.”
The Illinois Department of Finance and Professional Regulation today via a lottery awarded 55 new social equity adult-use dispensary licenses.
A list of new conditional licenses awarded, including 36 in Chicago and outlying suburbs, can be read here.
New conditional licensees, who did not have to go through the arduous and expensive application process, have until August 28 to submit proof of eligibility.
While demand for legal cannabis in the state is rising – recreational consumers spent nearly $140 million on the product in June – the market to finance licensed social equity retail, craft grow and infusion startups has all but collapsed over the past 12-to-18 months. Many of those once coveted licenses will never be operationalized. Nearly one year after a federal court allowed 185 adult-use retail cannabis licenses to be issued by the state of Illinois, only 27 out of the 192 social equity licenses are open today.
“It’s tough right now even for people who have a rolodex,” said Ameya Pawar, co-founder of Okay Cannabis which opened two retail locations earlier this year in the Chicagoland BLS Region 5. “While the lottery gives more folks a chance, this ultimately comes back to capital, and providing more access for black and brown people trying to secure lending.”
Laura Jaramillo Bernal, chief operating officer at vertically integrated and original medical license holder nuEra Cannabis, says the state of Illinois should allocate more resources to serving existing social equity licensees struggling to open.
“We have always anticipated more competition will mean we need to keep investing in our value proposition which means new stores and the best prices,” she said. “That’s always challenging, but achievable for a company like ours who have achieved some scale. I think it will be hardest for the 185 existing social equity licenses.”
Those mostly minority-owned businesses have persevered through a Kafkaesque series of events over the past four years. This includes Covid shutdowns, a botched scoring process, two years of litigation and the evaporation of capital for the vast majority of social equity startups and publicly traded and vertically integrated cannabis corporations alike.
And Illinois social equity retailers are in a relatively strong position when compared to their counterparts in other licensed categories.
Maybe five of the several dozen craft grow licenses awarded over the last two years are operational today. In today’s climate, investors are unsure of how they will get a return on the millions of dollars required to stand up a 5,000 square-foot facility that can keep up with established cultivators ten to twenty times or more their size.
Only a small fraction of licensed infusers are operational. Most frustratingly, it’s unclear if there will ever be a market for licensed transporters if there are not enough independent cultivators and manufacturers to service.
While extending access to prospective social equity operators who were unable to secure a license through the application process is generally supported by advocates including Edie Moore, the founder of Chicago NORML who obtained multiple retail licenses via the original application process, the timing and sequencing is questionable at best.
“There is still so much that has not been figured out and we were very hesitant as to when new people should be added,” she said. “It just adds another group of folks who do not have funding and probably do not have real estate. It’s just not a good situation.”
Four questions Burn ‘Em planners will be addressing next month
Grown In on August 10 will convene 125 stakeholders committed to fortifying Chicago’s existing leadership position in commercial cannabis. Curated participants of The Burn ‘Em PlanTM Launch Meeting will include a mix of C-suite industry executives, founders of social equity startups, civic and governmental leaders as well as canna-curious investors and corporations seeking easier pathways to expand into the ascending sector.
Several facilitated small group conversations will address the following questions.
- How can federally insured financial institutions and mainstream corporations comfortably serve the sector today – ahead of federal normalization?
- What research is needed to help the industry better understand what it will take to attract the mass market of consumers to cannabis and make its use as ubiquitous as alcohol.
- Does the cannabis industry have an intrinsic obligation to distribute ownership to individuals and communities most adversely impacted by the war on drugs?
- How can Chicago fortify its existing leadership position in commercial cannabis through better collaboration between corporate, startup, civic, governmental and higher education stakeholders?
The Burn ‘Em Plan kickoff event is made possible through the support of generous sponsors and partners including Cresco Labs, World Business Chicago, Organic Urban Revitalization Solutions, PharmaCann, Illinois Equity Staffing, Nature’s Grace and Wellness, Chicago NORML, Michael Best & Friedrich, The Cannabis Equity Coalition of Illinois, 1871, HT23 and Discovery Partners Institute.
If you and / or your organization wishes to support ongoing Burn ‘Em Plan initiatives, please contact Brad Spirrison at brad@grownin.com.
Grow No Little Plans!
