You and Illinois’s new Cannabis Regulation and Tax Act. Part 6 – Infuser Organizations
Pursuant to Section 5-10 of the Illinois Cannabis Regulation and Tax Act, the Illinois Department of Agriculture is the licensing authority for cultivation centers, craft growers, infuser organizations and transporting organizations and agents.
The addition of a category of licensees known as infuser organizations is a welcome boon to innovation and access allowing entities to manufacture and produce cannabis-infused products without the burden of growing cannabis. We wanted to take the time to highlight some requirements and interesting points related to the infuser license.
Under the Illinois Cannabis Regulation and Tax Act, the simple definition of an infuser organization is:
“Infuser organization” or “infuser” means a facility operated by an organization or business that is licensed by the Department of Agriculture to directly incorporate cannabis or cannabis concentrate into a product formulation to produce a cannabis-infused product.
Article 35 of the Illinois Cannabis Regulation and Tax Act delineates the powers of the infuser organization class of licensee.
Under Article 35, infuser organization applications must be made available on January 7, 2020, and the Illinois Department of Agriculture is authorized to issue up to 40 infuser licenses not later than July 1, 2020. Applications must be submitted by March 15, 2020. (Up to 60 additional infuser licenses may be issued by December 21, 2021, and may augment this number based on criteria such as demand, supply, and the Department’s ability to regulate infuser organizations).
Although the regulations and forms are not fully developed, the statute provides requirements for those looking to obtain an infuser organization license. Under the Cannabis Regulation and Tax Act, an applicant for an infuser organization and its principal officer, board members, or agents will undergo Section 5-20’s background check requirements including fingerprinting and criminal record check with the Illinois State Police.
The application process also includes the following:
- A nonrefundable $5,000 application fee or other amount set by the department following January 1, 2021 (if a license is awarded, an additional $5,000 fee is required);
- Legal name;
- Proposed Address;
- Name, SSN, DOB, of each principal officer and board member (all must be over 21);
- Administrative and judicial histories for principal officers and board members;
- Operating bylaws including procedures for oversight of the infuser, plant monitoring system; record keeping, staffing plan, security plan approved by the state police (and a physical inventory of all cannabis must be performed on a weekly basis);
- A copy of the local zoning ordinance and verification that the proposed infuser is in compliance with local zoning rules and distance limitations established by the local jurisdiction;
- A proposed employment practices description that must demonstrate a plan of action to inform, hire, and educate minorities, women, veterans, and persons with disabilities, engage in fair labor practices and provide worker protections;
- The applicant must also demonstrate experience in or business practices that promote economic empowerment in disproportionately impacted areas, experience with infusing products with cannabis concentrate; a description of the enclosed and locked facility where the cannabis will be infused, packaged or otherwise prepared for distribution to a dispensing organization or other infuser, processing, inventory and packaging plans; a description of the applicant’s experience operating a commercial kitchen or laboratory preparing products for human consumption, list of academic degrees or certifications or experience of principal officers and board members and agents;
- The identity of every person having a financial or voting interest of 5% or greater in the infuser operation;
- The infuser must describe how it will address energy needs and gas usage, water usage, waste management and reduction, recycling (including any sustainable practices for each of those).
Provided an application is properly submitted, the Article authorizes the Department of Agriculture to adopt a rule to score applications to rank them based on clarity, organization and quality of the responses awarding points for each of the required categories of information. Additional points can be awarded for qualities like veterans status, residency status, community engagement, participation in the Cannabis Act’s incubator, education, and social equity program/mandates. Applicants are advised that if an application is granted, those programs and plans submitted to get bonus points become a condition of the license and variations from those plans can result in discipline and revocation.
A few other points about operations:
Processing by an infuser must take place in an enclosed, locked facility a the physical address provided during the licensing process. Only agents working for the infuser, contractors working on jobs unrelated to cannabis, transporter agents, social equity program participants, and government officials can access the facility. However, if an infuser shares a premises with a craft grower or dispensing organization, agents from these other licensees may access the infuser portion of the premises if that is the location of common bathrooms, lunchrooms, locker rooms, or other areas of the building where processing of cannabis is not performed. At no time may a craft grower or dispensing organization agent perform work at an infuser without being a registered agent of the infuser.
A dispensary organization can share premises with an infuser organization (as it can with a craft grower) provided each licensee stores currency and cannabis or cannabis-infused products in a separate secured vault to which the other licensees do not have access (unless the licensees share more than 50% ownership).
A cultivation center licensed under the Illinois Cannabis Regulation and Tax Act may not either directly or indirectly discriminate in price between different dispensing organizations, craft growers, or infuser organizations that are purchasing a like grade, strain, brand, and quality of cannabis or cannabis infused products. Infusers are also prohibited from such discrimination in selling.
Beginning July 1, 2020, cultivation center licensees cannot transport to infuser organizations absent a transporting organization license.
Craft growers may sell ot infuser organizations and may enter into a contract for transport with a transporting organization in order to do so.
For transfer, all cannabis harvested by a craft grower must be labeled and packaged in a cannabis container before transport unless premises are shared. And cannabis infused by an infuser intended for distribution to a dispensing organization, a cultivation center, infuser or craft grower must also be packaged, cataloged and labeled.
Infusers are subject to random inspections and cannot be located in a residentially zoned area.
With a few exceptions regarding county size and distance of transportation, infusers cannot transport cannabis absent a transporter’s license.
Illinois Cannabis Regulation Act limits infusers in certain ways:
Interestingly, the statute prohibits extraction of concentrate. “At no time shall an infuser organization or an infuser agent perform the extraction of cannabis concentrate from cannabis flower.” Section 35-31 of the Act provides for the Department of Agriculture to create rules for ensuring infusers have access to raw materials (defined as including, but not limited to, CO2 hash oil, “crude”, “distillate”, or any other cannabis concentrate extracted from cannabis flower by use of a solvent or a mechanical process). The rules may allow for infusers to obtain “processor licenses” (ostensibly the ability to perform the prohibited extractions) but there is no guarantee that the Department’s studies into the topic of an adequate supply will lead them to conclude that they should allow infusers the right to process by extraction.
Finally, there is an increase on costs once you are up for the renewal as the renewal fee is $20,000 and renewal requires reporting regarding diversity, environmental impact and operating in accordance it hany approved plans.