You and Illinois’s new Cannabis Regulation and Tax Act. Part 4 – Craft Growers.

Article 30 of the new (soon to be signed) Cannabis Regulation and Tax Act creates a license type for small cultivators and, given the current trend for nomenclature, came to designate these small-scale cultivators as “Craft Growers.”

Subject to a 7% state tax on the gross receipts from the Craft Grower’s sale of cannabis, the Craft Grower licensee can cultivate, dry, cure and package cannabis for sale to a dispensary or other processing organization in a facility with up to 5,000 square feet of canopy space (Department of Agriculture can adjust this in increments of 3,000 square  up to 14,000).

As with an Infuser Organization, a Craft Grower may share premises with a cannabis dispensary licensee.  

Some restrictions:

• The limit on the number of Craft Grower licenses in Illinois is 40 up to July 1, 2020 and then up to 60 additional (that’s 100 total) by December 21, 2021. (Additional license may be issued if the Department of Agriculture decides to raise the number up to 150 total Craft Grower licenses for small cannabis cultivators – if the Illinois Department of Agriculture does raise the number, then the limitation on the number of Craft Grower licenses a person or entity can own increases to 3.)
• A person or entity cannot hold more than two Craft Grower licenses.
• The first 40 Craft Grower licenses awarded are embargoed from resale/change in ownership until December 21, 2021.
• No person or entity with a 10% or greater interest in a Cultivation Center license can hold a Craft Grower license.
• Craft Growers cannot discriminate in price between different cannabis businesses purchasing like grade product.
• Transportation to other cannabis businesses requires a Transport Organization license unless the cannabis receiving the product is within a set distance (varies depending on size of the county the Craft Grower is in) of the Craft Grower’s facility.
• Craft Growers are prohibited from offering things “of value” to retailers (dispensaries) or their affiliates for preferential stocking and treatment/shelf placement.
• Cannot locate within 1,500 feet of another Craft Grower or Cultivation Center.

Applications:

Similar to other application processes for Dispensary and Cultivator cannabis licensure, Craft Grower license applicants must:

• Provide a $5,000 non-refundable application fee.
• Provide personal information for each officer and board member (identifying information, criminal and civil judicial history, background checks).
• Provide its bylaws and corporate plan, business plan, local zoning information for site location, lease, security, employment practice information (attention is given to plans for hiring minorities/veterans/women/those with disabilities and to plans for promoting “economic empowerment in disproportionately impacted areas”).
  Provide information on owners over 5%, operational issues, environmental issues, technology considerations.

Anticipating more applications than available licenses, the Act establishes as method for the Department of Agriculture to score the applications in order to be able to assign them a rank by awarding points based on selected criteria such as the records requested, and other matters like the residency of the applicants, their commitment to diversity and community engagement.

Best to get started on these applications now as developing them, refining them, and additin in information as the Department of Agriculture develops its criteria will give you a head start on obtaining as many points as possible.