Moving from craft grower license awardee status to established business owner, is not as easy for some as it is for others. Securing capital and delays with licenses being awarded are posing challenges for Illinois craft grower license winners who are trying to start their business.
Ambrose Jackson, president and CEO of Helios Labs and craft grow license holder, says although license holders are fortunate to have been awarded a craft grower license, some are handcuffed as social equity applicants.
“This was an unintended consequence of legislation that limited our production initially to 5,000 [square feet of] flowering canopy,” Jackson said. “For craft grower license winners that are in the process of, in some cases securing facilities, and maybe redesigning floor plans, it makes sense to build out a facility capable of operating at the maximum 14,000 square feet of flowering canopy. The problem is it becomes cost prohibitive for some.”
Scott Redman, founder of trade group the Illinois Independent Craft Growers Association, says he was not aware of operational delays but added that he’s not surprised given the timelines, costs and the COVID-19 impact on construction.
“These are $10 million plus projects,” Redmond said. “It will take most people probably a year before they’re up and running. “We only were awarded licenses back in July. “If all you had was a lease on an empty space…There are all sorts of equipment to buy and permits to get. On top of all that, you’ve got the COVID impact which has set back construction significantly.”
Though everyone is trying to navigate the current environment, being hit with so many delays has had financial implications for social equity applicants.
“The licenses were dropped on us without much notice after a year’s delay, really. I wouldn’t say folks have been caught flat-footed, but I think the type of relief that is included in this bill are the types of things that I think are necessary to help level out the playing field for craft growers which are just getting further and further behind.”
Jackson added that legislation will play a key role in helping to ease some of the struggles.
“It’s important that the legislation is amended to allow craft growers to operate at 14,000 square feet of flowering canopy, immediately.
Some license winners may be holding out for passage of HB4097, sponsored by Illinois State Rep. La Shawn Ford (D-Chicago), which amends the Cannabis Regulation and Tax Act, increasing allowable square footage for canopy and the ability to co-locate licenses in the same facility.
Co-location and the ability to establish co-ops is another measure that could provide relief on the capital burdens that are required to become operational, Jackson said.
Jackson operates three different licenses: a craft grow, a retail dispensary, and a cannabis transportation business.
As a craft license holder, Jackson and his team decided to do everything within their power to retain control of their facility that’s included in their application.
“Because we were successful in doing that, I think we started off in a pretty good position with our facility, ” he explained. “We can still use our floor plan. It was already zoned for craft. I didn’t have to spend time searching and looking for a new facility and going through those steps over again. So, as soon as we were awarded a license, we were able to dedicate our time and attention to trying to get the funding that we needed. Myself, and a couple of team members have been working on it like a full-time job for the last couple of months.”
With the help of friends and family, Jackson was able to move forward with some of the preconstruction work so that he didn’t lose any time. He was also able to identify a partner for financing.
Jackson added that it’s important to share their perspective on what’s going on with delays.
“The worst that can happen for Illinois on top of all the failures with the roll-out of these licenses, is that the majority of the license winners on the social equity side are not able to stand up their companies. That doesn’t help anyone.”
Charles Wu, CEO of Nexem, a hemp and cannabis cultivation company, pointed to a range of issues, including “paper tigers,” applicants who are not qualified but use veteran points to win licenses.
“People who know what they’re doing and have the resources and financing, is a limited pool,“ he explained. “Given also how the craft rules are set up, and the complexities of this business, and everything else.”
In some cases, Wu said people apply for licenses with the intention of figuring everything else out later.
“But now, because of delays, your financing has changed because, when you were getting licenses, it was ‘If you build it, they will come.’ We are now two years post recreational legalization and then it’s another 18 months to get your facility up and running and get the product to market. It’s no longer a ‘build it and they will come.’ Now you have a situation where you have someone who has a license and will have to raise money.”