You and Illinois’s proposed Cannabis Regulation and Tax Act. Part 2 – the Early Approval Adult Use Dispensing Organization Licenses available to current medical cannabis dispensing organizations and their right to secondary sites.

A little something for everybody. That’s our take on the theme of the new Illinois Cannabis Regulation and Tax Act. In Part 1 of our series we discussed the new Illinois recreational marijuana statute’s regulation of personal use, home growing cannabis, and possession.That was a boon for the public (and, quite frankly, the whole reason for the statute – authorization of recreational cannabis).

In Part 2, we’re covering the little nugget of joy the statute grants to a certain segment of current cannabis industry players in Illinois – the medical cannabis dispensing organizations that are currently licensed and registered under Illinois’s Compassionate Use of Medical Cannabis Pilot Program Act.

These intrepid pioneers braved the complex regulatory system, Federal disapprobation, the ever-present threat of violating the Controlled Substances Act, and forged a path for medical marijuana in Illinois and are given a just reward under the Illinois Cannabis Regulation and Tax Act – the chance to open before anyone else as an adult use dispensing organization capable of offering marijuana to the public.

This right is granted under Article 15 of the proposed Cannabis Regulation and Tax Act and offers two benefits. The first is the ability of the medical marijuana dispensing facilities to apply for adult use dispensing licenses and obtain adult use dispensing licenses before others and the second is the grant and ability to also apply and receive early authority to open a second facility.

Here’s how. Article 15 of Illinois’s proposed Cannabis Regulation and Tax Act, creates the “Early Approval Adult Use Dispensing Organization License.” Only medical cannabis dispensing organizations holding valid licenses under the Compassionate Use of Medical Cannabis Pilot Program Act can apply for the Early Approval Adult Use Dispensing Organization Licenses.

In order to obtain an Early Approval Adult Use Dispensing Organization License to sell cannabis to adult users in Illinois before other adult use licenses are granted, applicants must:

• Apply to the Illinois Department of Financial and Professional Regulation for the Early Approval Adult Use Dispensing Organization Licenses within 60 days of the effective date of the Illinois Cannabis Regulation and Tax Act.(The Department is to have forms ready) to serve adult use purchasers at any medical cannabis dispensing location in operation on the effective date of the Act.
• The same entity that holds the medical cannabis dispensing license must submit the application to sell cannabis in Illinois under the Early Approval Adult Use Dispensing Organization License.
• The applicant will need to pay a nonrefundable $30,000.00 deposit into the Cannabis Regulation Fund.
• The applicant also needs to be in good standing, certify that it will comply with the requirements in the Compassionate Use of Medical Cannabis Pilot Program Act, provide background information on each officer and board member, provide a nonrefundable Cannabis Development Fee of either 3.0% of the dispensing organization’s total sales between July 1, 2018 and July 1, 2019, or $100,000.00 – whichever is less.
• The applicant must also detail which of several social equity inclusion plan options it will complete by March 31, 2021. These include contributing sales monies to the Cannabis Business Development Fund, granting sales monies to a community college program focused on cannabis industry training or education, donating $100k for job training for former inmates or a program that operates in a disproportionately impacted area, incubating a cannabis startup qualifying as a social equity applicant, or providing an interest free 2-year $200k loan to a social equity applicant.

The reason anyone would want to do this? – First-mover advantage. Under the Cannabis Regulation and Tax Act, the Department shall issue an Early Approval Adult Use Dispensing Organization License within 14 days of receiving a proper application and sales are authorized to begin on January 1, 2020, so – assuming you’ve made the 60 day window and been approved. Come midnight on New Year’s Eve – you may have an additional cause to celebrate.

Any facility holding the Early Approval Adult Use Dispensing Organization License needs to maintain an adequate supply of cannabis products to meet the medical use demands. The first renewal fee for the annual license will be an additional $30k and then it increases to $60k the following year.

But wait, there’s more:

YOU GET A SECONDARY SITE!

That’s right – it’s a twofor.

Within the same 60 day timeframe, any  medical cannabis dispensing organizations holding valid licenses under the Compassionate Use of Medical Cannabis Pilot Program Act can apply for a SECOND Early Approval Adult Use Dispensing Organization License for a SECOND site.

• The second site cannot be within 1,500 feet of another medical cannabis dispensing organization or adult use dispensing organization.
• The second site must be within a BLS Region that shares territory with the dispensing organization district into which the medical cannabis dispensing organization is assigned under the administrative rules for dispensing organizations under the Compassionate Use of Medical Cannabis Pilot Program Act.

What’s a BLS Region, you ask? – Well, dear reader, it is defined under the proposed act: “BLS Region” means a region in Illinois used by the United States Bureau of Labor Statistics to gather and categorize certain employment and wage data. The 12 such regions in Illinois are: Bloomington, Cape Girardeau, Carbondale-Marion, Champaign-Urbana, Chicago-Naperville-Elgin, Danville, Davenport-Moline-Rock Island, Decatur, Kankakee, Peoria, Rockford, St. Louis, Springfield, Northwest Illinois nonmetropolitan area, West Central Illinois nonmetropolitan area, East Central Illinois nonmetropolitan area, and South Illinois nonmetropolitan area.

• For the secondary site, the applicant will need to meet and pay additional fees and criteria the same as for the first license as well as providing a plot plan/site layout, proof of zoning approval from the governing zoning authority, copies of proof of ownership of the property or authority to operate from the landlord, the operating bylaws, business plan, security plan, a nonrefundable $200,000.00 fee.
• Final approval for a secondary site is contingent on build-out and Department inspection and provided the timing is right – can also start selling on January 1, 2020.

Also, those agents holding valid identification card issued under the Compassionate Use of Medical Cannabis Pilot Program Act that are officers, managers, directors or employees get carried over and can engage in all the activities authorized by dispensing organization agents under the Cannabis Regulation and Tax Act.

This is an excellent reward for those in the industry who took the risk to open dispensaries. Let’s hope this bill starts to get some traction and can get passed soon.