One of the key promises of Illinois’ support for cannabis social equity license winners was supposed to be government support in the form of subsidized loans from the State of Illinois. But according to craft grow license winners – all of whom qualify as social equity license winners – that promise is falling flat.
“The emails go unanswered. It’s this black hole of nothingness. I’d say overall frustration would be the word to summarize the process,” said John Murray, an owner of craft grow licensee Sustainable Innovations and social equity loan applicant.
The idea was simple. Illinois’ twenty cultivation licensees, who first won their right to sell medical cannabis in 2015 and have since dominated the a market that sold $1.8 billion in legal cannabis in 2021, were to pay into a fund managed by the Illinois Department of Commerce and Economic Opportunity (DCEO). That fund would then provide subsidized loans to qualified cannabis social equity license winners. Loans could go up to $1 million for craft grow operators, and $500,000 for operators of other license types.
The subsidized loans were expected to be a lifeline for many license winners, since craft grow startup costs were expected to be in the multi-million dollar range and many social equity license winners lacked relationships with trusted investors. That first injection of state money would enable license winners to secure their property, pay for architectural drawings, and prove out their ideas on the way to securing more investor support.
But instead, license winners have run into a slow-walked process with extra hurdles. Which they call an insult to injury after the state delayed awarding craft grow licenses by a year, emptying out many license winners’ cash reserves.
“We originally applied for the DCEO back in March 2020. We then applied again at the licensing of the award. They seemingly lost everything we supplied before, we did a comprehensive application that we spent weeks on initially, and then we had to redo an application again. In August 2021,” said Murray.
“We filled out an application in March 2020, and never heard anything back,” said Eric Ice-Gipson, owner of the craft grow licensee the 1937 Group, and a loan applicant. I resubmitted new forms at the end of July..And we didn’t hear back from them until we emailed a couple more times.” Finally, in late December Ice-Gipson learned he was conditionally approved. But DCEO rules were that his company had to reapply with one of two potential lenders, Good Tree Lending or Credit Union 1, and even then he was allowed to apply with only one lender at time.
Given multiple days for a response, a DCEO spokesperson told Grown In the agency would not be able to respond by publication.
Getting a loan soon is an urgent matter for craft grow winners, since “There’s a June 2022 deadline for when you have to be operational. The law says 180 days from award to be operational,” said Ice-Gipson.
“The people that did apply are kind of in a tough spot,” said Scott Redman, a craft grow license co-owner and executive director of the Illinois Independent Craft Growers Association (IICGA). “If someone applied for it, how many months ago, and assumed they would get it, and counted on it, now they’re behind the eight ball because they didn’t get the money.”
One license winner who did not apply for a loan, observing the program’s slow roll, says they feel like they dodged a bullet.
“We didn’t have the time to apply for it. And I’m not sad that we didn’t. We felt like that we’ll be able to do this without, and if the funds are limited, it might be better for folks who can’t raise money to get it,” said William Moss of Herold Moss Management, a craft grow licensee.
Last month, concerned about DCEO’s slow-moving loan process, the IICGA paired up with another trade association, the Cannabis Business Association of Illinois, and sent a letter to DCEO acting director Sylvia Garcia, asking for a status update and clarification of how much funding will be made available to applicants.
[Read the letter sent to DCEO and their response.]
Responding two weeks later, acting director Garcia did not supply the total dollars available for loans, but said that only 12 craft grow licensees applied, of the 40 awarded so far. Of those 12, only ten were accepted.
With such a low number of applicants, licensees are wondering what took so long.
“Some people would say they’re not living up to their promise,” said Bobby Burns, a co-owner of craft grow licensee and loan applicant Urban Gardens. “We want to be operators. The spirit was to have social equity operators in this new industry. Unless the state can help us, our concern is a lot of craft growers will have to sell their licenses.”
