Illinois Adult-use Cannabis Bill - Early Approval?!?

In an effort to meet the anticipated demand of the adult use market, the proposed bill (SB 0007) creates 110 new adult use dispensary licenses. According to Section 15-15 Early Approval Adult Use Dispensing Organization License, the 55 current license holders will be able to apply for an adult use dispensary license on “Day One“ (anticipated: January 1, 2020). New licenses for all other applicants will be awarded on a tiered schedule (75 licenses on May  1, 2020 and 110 licenses on December 21, 2021.)

The Early Approval program allows each current medical dispensary licensee  to bypass the traditional process by paying a licensing fee and making a contribution to the Cannabis Business Development Fund.  The purpose of the Fund is to reduce financial barriers to entry for social equity applicants through loans, grants, fee waivers, and other vehicles.  Each licensee can receive at least two new adult use dispensary licenses by paying $100,000 for the first license and $200,000 for the second one.

While Chicago NORML is encouraged by the legislators’ efforts to support social equity applicants by using the early approval program to pre-load the Fund, we do not support the proposed timeline and fee structure for this process. The early approval provision of the bill gives current medical operators the added privileges of priority, greater time-in-market, and advanced access to prime locations. Given the bill’s intentions to allow local municipalities to establish their own rules for setbacks, zoning, and the number of dispensaries they will allow (or whether they will allow ANY at all), the proposed timeline positions the adult use program to replicate the inequities that currently exist in the medical pilot program. Allowing current operators access to adult use licenses before any other business have the opportunity to apply. This will undoubtedly prove to be detrimental to the very social equity licensees that the program is intended to help.

True equity means giving each group of applicants what they need in order to compete on a level playing field. Chicago NORML vigorously opposes the notion that current operators should be treated with priority and preference over any other aspiring applicant.  

Current operators already have the privilege of being members of an exclusive and homogenous group of dispensary owners with capital resources, industry relationships, and the benefit of experience that comes with having a three-year head start. They will already be among the first, if not the only, applicants to be ready for licensure in the first place.

Illinois can create a truly equitable adult use market by allowing all applicants to start the initial application process at the same time as the current operators, within 90 days of the effective date of the Act.  Further, the State will ensure better predictability of funding levels by changing the fee sequence for the early applicants. The current medical license holders should pay $200,000 (+$30,000 registration) for the FIRST adult use license and $100,000 (+$30,000 registration) for each additional license.  

It is a mistake for  the State to arbitrarily enforce a saturated market based on “Day One” estimates.  “Day One” of adult use cannabis legalization in Illinois will be an exciting and vibrant day, complete with the long lines that other states (and Canada) have seen on the first day of legal cannabis sales.  The fundamental law of economics is that supply follows demand. Market absorption means that businesses will enter the marketplace to service the demand. Chicago NORML demands that lawmakers level the playing field and give social equity applicants a fair opportunity to compete in the legal adult use market.

Chicago NORML