Pritzker Administration Says Cannabis Program Will Get Back On Track After Legislative Tweaks

Illinois’ first year of legal recreational cannabis was successful in many ways, providing a bright spot in an otherwise dismal year for the retail sector. Providers oversaw the establishment of 55 new dispensaries, sold more than $1B of product and paid $175M in state taxes.

But one hiccup was the failure to award any of the 75 dispensary licenses set aside for social equity applicants, licenses meant to foster minority-owned businesses in the new industry and get money flowing into communities heavily impacted by the nation’s long-running war on drugs.

Hundreds of groups applied last year for a chance at one of the 75 social equity licenses, but the coronavirus pandemic caused months of delays. State officials then only approved 21 proposals, and many of those were from White-owned businesses that qualified by forging partnerships with minorities. Gov. J.B. Pritzker decided to recalibrate how social equity applicants were evaluated, further delaying the program, and lawsuits from both the winners and losers began flying back and forth.    

That left Illinois' cannabis sector dominated by a handful of multistate operators such as Cresco Labs, Green Thumb Industries and Curaleaf, which last July closed its $700M acquisition of Grassroots, a Chicago-based cannabis firm. 

State officials and advocates said that while the delay is unfortunate, part of the difficulty was that Illinois’ attempt to promote equity in the cannabis sector was more ambitious than in other states. Instead of simply setting aside a number of licenses for social equity applicants as other states have done, Illinois also reserves a big chunk of the tax revenue generated by cannabis sales to fund social equity dispensaries and growing operations, according to former state Sen. Toi Hutchinson, now Pritzker’s senior cannabis adviser.

“And all of that had to happen amongst 13 different agencies in the midst of a global pandemic that no one could have anticipated,” Hutchinson said Tuesday during Bisnow’s Illinois Cannabis Update Digital Summit. “What I say on a regular basis is what Illinois is experiencing is what happens when you put a jackhammer in the ground for the first time. It’s loud, and it’s messy, it’s rocks and debris flying, and sometimes it hurts. But it’s also what happens when you break new ground.”

Fixing the social equity provisions will also require legislative tweaks, Hutchinson said. State Rep. La Shawn Ford put forward a legislative proposal in March that would adjust the qualifications for social equity applicants and give even more weight to people of color and those from neighborhoods impacted by cannabis prohibition. It would allow the lottery for the initial 75 social equity licenses to go forward and add several more lotteries for more than 100 additional licenses to sell recreational weed.

Pritzker and advocacy organizations such as the Chicago chapter of the National Organization for the Reform of Marijuana Laws have voiced support for Ford’s proposal.   

Don’t expect the administration to rush things. A hallmark of Pritzker’s overall approach to recreational cannabis has been to avoid the free-for-all that enveloped markets elsewhere in the U.S., first by restricting the first 55 licenses to existing medical cannabis providers that had operated safely in the state for years. Hutchinson said the administration is committed to doing likewise as it builds in a social equity component, so speed is less important than making sure it is done in an orderly, step-by-step manner.

But there is some urgency. Hutchinson said she worries that if recreational cannabis is legalized federally, it would override rules and procedures adopted by Illinois, including ones that promote equity.

“We’re on the precipice of national legalization, and we don’t want national legalization to undo the equity work that the state is doing right now.”