Cannabis equity advocates and social equity business leaders in Illinois are urging Gov. JB Pritzker, the general assembly and state department officials to assist equity operators in various ways, including becoming operational and achieving valuable market share.
On Sept. 7, a group of advocates and business leaders led by Chicago NORML, the local chapter of the National Organization for the Reform of Marijuana Laws; the Cannabis Equity Illinois Coalition; former Illinois state senator and social equity cannabis dispensary licensee Rickey Hendon; and others, held a press conference in front of a downtown Chicago building that houses offices for the Illinois Department of Financial & Professional Regulation (IDFPR) and the Office of the Governor.
“We’re calling to make changes today in order to move this program in the right direction,” said Douglas Kelly, executive director of the Cannabis Equity Illinois Coalition, during the press conference. He said advocates strives to ensure state officials keep equity and justice in conversations about the state’s cannabis industry.
Ambrose Jackson, chairman and CEO of vertically integrated social equity cannabis company The 1937 Group, said: “Our cannabis social equity program is on the verge of collapse.”
Illinois’ cannabis industry has received $3 billion in adult-use cannabis sales totals since adult-use sales began in the state Jan. 1, 2020, Jackson stated. However, he said Black and Brown business owners have not been reaping the benefits as they are hamstrung by state legislative and agency actions and, in other cases, inaction.
On Sept. 8, a spokesperson from Pritzker’s administration provided the following statement to CBT: “The administration is always looking for ways to improve social equity in the cannabis industry, which has been a priority of the Governor’s since day one of this process. Proof of this commitment can be seen in the significant steps already – 185 social equity licenses are now out the door and the application process has been simplified for future applicants. $113 million in cannabis revenue has gone to communities affected by the war on drugs as part of the effort to correct past wrongs. Ensuring equity is a long term process designed to right decades of inequality and help build generational wealth for Illinoisans excluded from doing so in the past. The Governor looks forward to continuing to work with the General Assembly on streamlining the process and helping social equity applicants enter and thrive in the industry.”
In addition to issuing 185 social equity dispensary licenses, Illinois has issued 88 social equity craft grow licenses and has also cleared and expunged roughly 800,000 cannabis-related convictions and arrest records. The $113.5 million in adult-use cannabis tax revenue reinvested into communities has been done through its Restore, Reinvest, and Renew (R3) Program. Grant funding from the program goes toward “communities that have been harmed by violence, excessive incarceration, and economic disinvestment,” according to the R3 site.
Ahead of the Sept. 7 press conference, the Chicago NORML, the Cannabis Equity Illinois Coalition, and Hendon’s company, Westside Visionaries, issued a press release Sept. 6 stating Illinois departments and its general assembly have “effectively handcuffed and redlined” social equity businesses in the below ways. (CBT has added brackets next to acronyms. The legislature legalized adult-use cannabis via the Cannabis Regulation and Tax Act in 2019.)
“Craft Grow Licensees:
• Blocked legislation that would allow the immediate increase of allowable canopy space to 14k SF rather than 5k SF.
• Blocked legislation that would allow multiple license holders to co-locate and share facility expenses.
• The State has offered no guidance regarding location 1st-movers creating an unnecessary, hyper-competitive, and potential overcrowding in disagreement with the CRTA [Cannabis Regulation and Tax Act].
• The Department should not interfere in the flexibility of conditional licensees to obtain equity financing or management service agreements.
• The DCEO [Department of Commerce and Economic Opportunity] loan program is NOT ready to provide licensees with much-needed funding underwritten by the CBD loan fund.
• New policy guidance released by DOA [Department of Agriculture] disallows creating vape cartridges even though applicants gave clear intention to do so in their applications.
• There is not enough distillate supply.
• The Department issued the MSOs licenses without a fair application process or a plan for sunsetting them once the TRUE licenses had been released.
• The ISP [Illinois State Police] has delayed inspections of vehicles prohibiting the businesses from moving forward
• The Department has not developed clear operational standards, curriculum or industry software for this sector.
• Blocked legislation that would reduce logistical costs by allowing storage depots for overnight holding.”
Various speakers participated in the press conference to address specific issues they see in the state’s social equity program.
The 1937 Group possesses cultivation, retail and transportation licenses. During the press conference, Jackson spoke on behalf of craft grow licensees.
“Currently, social equity license-holders are unable to secure the financing needed to stand up their craft grow operations, based off of the canopy restrictions imposed by the state,” Jackson said.
Cannabis licensees who have not yet become operational—following a licensing process that, for some, has taken years—have altogether lost millions of dollars in rent, mortgages, and rising supply chain prices and building materials, he said.
Hendon said he likes Gov. Pritzker and supports him but that social equity businesses currently feel like they have no one to talk to about their grievances. Of social equity businesses trying to become operational, Hendon said, “Instead of making it easier for minorities and women, Latinos and Blacks, they’re making it harder.”
Chicago PBS station WTTW aired a video segment Sept. 7 that included interviews with Chicago NORML Executive Director Kiana Hughes and Illinois Deputy Gov. Christian Mitchell.
Regarding communication with licensees, Mitchell said, “My office door is open, as is the governor’s. Our phone lines are open. There are multiple members of the coalition who have contact info for us. We’ve got to sit down and have a nuanced conversation about this and the future of social equity in the dispensary and craft grow space.”
Hughes said dispensaries want to raise capital by selling equity in their businesses, which they can’t do as conditional licensees who aren’t yet operational, per IDFPR regulations. Last month, about 200 dispensary licensees signed a Chicago NORML petition to allow them to sell equity in their businesses, according to the Chicago Tribune.
Hughes told WTTW Sept. 7 that current regulations are making it difficult for dispensary owners to raise capital. Additionally, she said, “You have people on the craft grow side who are having a hard time being able to raise capital to just outfit a 5,000-square-foot canopy space with the potential to grow to 14,000 square feet in the future.”
Hughes stated that investors have said those craft producers’ operations may not be lucrative enough for them to compete in the market.
In response, Mitchell stated Pritzker’s administration supports state legislation that would increase craft canopy space.
Mitchell said the administration has heard multiple opinions regarding investment and company ownership. “On the one hand, you’ve got owners who are saying, ‘Hey, we want to change principal officers so we can raise capital right now because we need it,’” he said. “On the other hand, you have pretty much an equal number of folks saying, ‘Hey, wait a second. We’ve got principal officers who have been holding this for a couple of years; they’re people of color; we want that growth in this industry. What we don’t want is some of these predatory folks who are coming in and saying, “Hey, I’ll give you some cash, but you’ve got to give me a majority stake in your business.”’
“Do we have to rescore that license now? Is that true social equity, if now, a majority person has bought in, has the stake, and now is saying, ‘I’m a social equity license because this person who originally had the license is a conditional holder’? These are all nuanced debates that we need to have.”
Regarding other points, Mitchell said Sept. 7: “On some of these other more technical issues that folks are talking about—for transporters, for infusers—many of those things are currently in the legislation, so we’re going to have to negotiate that with the legislature. But again, our office door is open. We are ready to have that conversation. In the meantime, we’re going to continue working with DECO to get loan funds out to some of those owners who qualify for social equity loans that will help with the liquidity issue immediately. We are working on that now; we just had a meeting about that today.”