How to Open a Dispensary in Illinois
On January 1, 2020, Illinois will become the eleventh state to legalize adult-use marijuana and the first to develop a state marijuana program through legislation. This brings the national tally to 11, as well as Washington, D.C, joining this movement toward the widespread availability of cannabis products. Governor J.B. Pritzker signed the Cannabis Regulation and Tax Act in June 2019 amid the state’s recent progressive political movement, which allows Illinois residents age 21 or older to purchase up to 30 grams of marijuana, while non-residents can purchase up to 15 grams. The bill will allow Illinois’ existing 55 medical dispensaries to apply for adult-use licenses for their current location and a secondary location if desired. For newcomers to the legal cannabis industry, Illinois is awarding an additional 75 dispensary licenses by May 2020 to be distributed between 17 pre-defined Bureau of Labor Statistics (BLS) Regions, the majority of which will be located in the counties surrounding Chicago. Cannabis is an industry with high growth potential on the horizon as legalization efforts continue to make progress. Still, entry is dependent on a strong dispensary application, which is ranked using a point system, and strict adherence to compliance regulations. The following guide outlines how to open a dispensary in Illinois, including the development of a winning application and the requirements unique to their legislation.
Illinois Dispensary Application DeadlineWith the impending legalization becoming official January 1st, 2020, application submissions must comply with strict deadlines to receive a license in May. Current medical marijuana dispensaries have the advantage of eligibility for Early Approval Adult Use licenses, which allows them to sell to consumers over 21 in addition to their current patients by applying for a “Same Site” license. Applications for these licenses will be accepted until March 17, 2021, and Secondary Site applications will be accepted until there is no longer a “reasonable amount of time” for review and inspection before March 31, 2021, when licenses will be awarded. Applications for new dispensaries follow a different timeline, with conditional and regular licenses available. Conditional Adult Use Dispensing Organization Licenses must be submitted by January 1, 2020, and will be awarded by May 1, 2020. These licenses prompt the holder to determine a location for their dispensary in their designated region within 180 days for inspection and approval before receiving their Adult Use Dispensing Organization License. These full licenses authorize holders to purchase and sell cannabis at their designated locations in compliance with the Cannabis Regulation and Tax Act. Licenses must be renewed on March 31, 2022, and on a biennial basis after that date.
How to Apply for Dispensary License in IllinoisTo begin the process of applying for an Adult Use Dispensing Organization License, first visit the Illinois Department of Financial & Professional Regulation (IDFPR) website to download an application before 12:00 pm on January 2nd, 2020. A copy of the application instruction sheet can be found here. The process includes some variability in requirements and costs for applicants depending on status as a “Social Equity Applicant.” For Non-Social Equity Applicants, a non-refundable application fee of $5,000 is due at the time of submission, and applicants who win licenses will be charged a $60,000 two-year license fee. Social Equity Applicants are given a 50% reduction on each of these fees, paying $2,500 for their application and $30,000 if awarded a two-year license.
Illinois Application RequirementsThe full application for an Adult Use Dispensing Organization License is a comprehensive, holistic analysis of the future business you intend to create, along with an assurance of the applicant’s capability to follow through. The following components make up the majority of the grading scale for awarding licenses, but Labor & Employment Practices, Suitability of Employee Training Plan, Security Plan, Environmental Plan, Illinois Owner, Status as a Veteran, and a Diversity Plan are sections that could give your business a competitive advantage.
Illinois Dispensary Security PlanYour security plan plays a major part in communicating that your organization is prepared for the risks of opening and operating a cannabis dispensary. Submissions will require a detailed description of electronic facility access control and surveillance, physical security measures like alarm systems and security guard patrol routes, in-depth employee emergency protocol and training, and cash/inventory management. Applicants must include a copy of a contract with a private security contractor licensed under Section 10-5 of the Private Detective, Private Alarm, Private Security, Fingerprint, Vendor, and Locksmith Act of 2004.
Business Plan, Operating Plan, Financials, and Floor PlanAlong with the security plan, your submitted business plan will present how your dispensary or grow operation will be managed. These two segments alone account for more than half of your final application score, so detail and precision are crucial to success. Your business plan will need to include the following:
- Description of the proposed point-of-sale system
- How your organization will process customer purchases and dispense cannabis
- How you will track denials of sale
- Methods for maintaining purchaser confidentiality
- Product/Service description
- Legal and Administrative compliance strategy
- The intended volume of stored cannabis at your proposed facility
- Day-to-day operations and staffing plan for hours of operation
- Compensation and benefits for full-time employees
- Proof of sufficient funds and financials to operate the proposed dispensary
- A floor plan that demonstrates an understanding of operating processes, compliance regulations, and security requirements
- Accommodations for safe storage of products
Knowledge or Experience in Cannabis or Related FieldsEach principal officer must submit an anonymized resume detailing their relevant qualifications and education that make them suitable candidates for operating an adult-use cannabis dispensary. This may include an academic degree, professional certification, or industry experience in either cannabis or business management. Additionally, each principal officer will be required to demonstrate intimate knowledge of the cannabis products he/she/they intend(s) to sell, especially information on particular strains of cannabis and methods of consumption.
Evidence of Status as a Social Equity ApplicantWhile this section is optional, it is a distinct and valuable portion of Illinois license applications. Applicants whose proposed organizations are eligible as Social Equity Applicants must be Illinois residents and qualify for at least one of the criteria detailed in the following section.
Social Equity and Disproportionately Impacted AreasTo be considered a Social Equity Applicant, applicants will need either:
- 51% ownership by principal officers who have resided in disproportionately impacted areas for at least 5 of the last 10 years.
- 51% ownership by principal officers who have a record of arrest or conviction for an act eligible for expungement under Public Act 101-0027.
- 51% ownership by principal officers who are members of an impacted family.
- Ten or more full-time employees, 51% of which must live in disproportionately impacted areas, have a record of arrest or conviction for an act eligible for expungement under Public Act 101-0027 or are members of an impacted family. These employees must be engaged in full-time work at the time of submission.
- 20%+ poverty rate
- 75%+ of students participating in the federal free lunch program
- 20%+ of household receiving SNAP assistance
- Two consecutive years with 120%+ the national level of unemployment