Latimer LeVay Fyock, LLCLatimer LeVay Fyock, LLC

Pritzker Signs Bill Authorizing an Additional 110 Cannabis Dispensary Licenses To Be Awarded to Social Equity Applicants in Two Separate Lotteries

Monica Palermo

In response to the many challenges presented by a protracted initial dispensary licensing round mired by litigation, Gov. JB Pritzker signed HB 1443 into law on July 15th, 2021, aiming to establish a cannabis industry in Illinois that centers on equity and community reinvestment.

HB 1443 provides for the creation of 110 additional social equity dispensary licenses. These are in addition to the original 75 dispensary licenses to be awarded to top-scoring, tied applicants via lottery on August 19th (rescheduled from May 2020).

The two-round lottery with an expanded lottery applicant pool consists of:

  • Qualifying Lottery for 55 licenses to be awarded on July 29th to those qualifying applicants who received a score of at least 85% of the 250 available application points. A limit of two licenses may be awarded to a single Applicant with multiple qualifying applications submitted to the Qualifying Lottery; and
  •  Social Equity Justice Involved Lottery for 55 licenses to be awarded on August 5th to qualifying applicants who received a score of at least 85% of the 250 available application points.  Such applicants must be 51 percent or more owned by someone who:
    • Has lived in an area disproportionately impacted by the war on drugs for ten years, or
    • Has an eligible cannabis-related conviction, or
    • Has a family member with such a conviction. 

Promise-To-Hire will not be a qualifier for the Social Equity Justice Involved Lottery. A limit of two licenses may be awarded to a single Applicant with multiple qualifying applications submitted to the Social Equity Justice Involved Lottery.

Qualifying or Social Equity Justice Involved lottery winners are subject to location requirements modified from those originally set forth in the Cannabis Act, including:

  • Allowing one Qualifying or Social Equity Justice Involved lottery winner to locate their site within 1,500 square feet of an Early Approval Adult Use site;
  • Removing the requirement that the Illinois Department of Financial and Professional Regulation (IDFPR) inspect the site prior to authorizing build-out; and
  • As otherwise set forth in HB 1443.

Each of the three lotteries will be a blind process, automated through a computer program and run through multiple quality assurance checks before the final results are delivered to the IDPFR. The IDPFR will make the results of each lottery available by 5:00 p.m. the same day.

HB 1443 also designates the five remaining medical cannabis dispensary licenses available for issuance to social equity applicants only andexpands access for medical cannabis users by removing restrictions on where medical cardholders can buy cannabis. 

A social equity applicant awarded one of the remaining medical dispensary licenses would be automatically approved for:

  • A Dual license (Medical and Adult Use) at the location holding the medical cannabis dispensary license; and
  • An additional adult-use dispensary license for use at a second site, as provided in the Cannabis Act.

In addition to the 110 additional dispensary licenses to be issued by the IDPFR, the Illinois Department of Agriculture (IDA) recently gave notifications to eligible applicants in connection with IDA’s issuance of:

  • 40 Cannabis Craft Grower Licenses (applicants have ten business days to respond from the date of IDA Notice);
  • 32 Cannabis Infuser Licenses (applicants have ten business days to respond from the date of IDA Notice); and
  • 141 Cannabis Transportation Licenses (applicants have until February 2022 to respond to IDA Notice).

Finally, in an effort to provide financial assistance to social equity cannabis licensees, and to help increase capital for social equity entrepreneurs over time, the Illinois Department of Commerce and Economic Opportunity has established a Social Equity Loan Program offering flexible low-interest loans to social equity owners holding cannabis licenses to help with their cannabis business expenses. 

Loan terms will be determined on a case-by-case basis, generally involving a repayment term of over five years, with $34 million in loans expected to be available in the first year. To be eligible, a loan applicant must meet the qualifications of a social equity cannabis applicant and have been awarded a cannabis license.

Qualifying Dispensary and Infuser Licensees may apply for up to $500,000 in loans; Cannabis Transportation Licensees up to $100,000; and Adult Use Cultivation Licensees up to $1 million.

If you have questions about HB 1443, cannabis licensing, or any other questions related to cannabis law in Illinois, please contact Monica Palermo at Latimer LeVay Fyock for a consultation.