You Won an Illinois Dispensary License, Now What?
June 2, 2020

In early January, Illinois received thousands of applications for adult-use cannabis dispensary licenses. Only 75 of those applications will be granted a license…eventually. Although the Illinois Cannabis Tax and Regulation Act (the Act) required the Illinois Department of Financial and Professional Regulation (IDFPR) to issue the licenses before May 1, 2020, Governor J.B. Pritzker and the IDFPR have delayed their issuance indefinitely due to the ongoing COVID-19 crisis. While the delay is certainly frustrating, a silver lining is that it provides applicants with additional time to prepare for the rigors of opening and successfully operating a dispensary.

An often overlooked aspect of the license process is that the state is awarding “Conditional Adult Use Dispensing Organization” licenses. Those conditional licenses do not allow for operations. Rather, they need to be converted to an “Adult Use Dispensing Organization” license. The first step in doing so is finding a suitable location. Illinois will award conditional licenses among the 17 Bureau of Labor Statistics (BLS) regions in the state. Conditional license holders will have 180 days from the date of issuance to secure a retail dispensary location within their BLS region. If a winner is unable to find a suitable location within 180 days, the IDFPR may extend the period for another 180 days, but only if the conditional licensee demonstrates a concrete attempt to secure a location. While we expect the IDFPR to liberally grant extensions, we recommend making best efforts to secure a location promptly. In fact, nothing prevents an applicant from scouting out locations now. If a conditional licensee does not obtain a viable property within the 180 (or 360 days if an extension is granted), the IDFPR will rescind the conditional license and award it to the next highest scoring applicant in the BLS region.

That begs the next question—what is a viable location? Applicants must first familiarize themselves with local zoning laws and issues. For example, the City of Chicago has a vigorous zoning process that is overlaid on the state licensing process. Other jurisdictions will likely have their own unique zoning requirements.

Once the applicant has navigated the zoning process and selects a compliant location, the IDFPR will inspect it, focusing on whether the location is suitable for public access, the layout promotes the safe dispensing of cannabis, the location is sufficient in size, has sufficient power allocation, lighting, parking (including handicap accessible spaces), product handling space, storage space, and has accessible entries and exits (as required by the Americans with Disabilities Act). Beyond that, the conditional licensee must establish that the proposed location is not within 1,500 feet of another dispensary. Finally, the conditional licensee must provide a statement of reasonable assurance that the issuance of a license will not have a detrimental impact on the community.

That last element is critical and requires a community engagement strategy. Our tip—go where you are wanted. Many communities are open to cannabis dispensaries, but are also legitimately concerned about the potential ramifications. It is paramount that conditional licensees meet with relevant stakeholders, including local officials, residents, and neighboring businesses, to understand their expectations and concerns. Failure to have community signoff can not only jeopardize the license conversion to a permanent one, it will make operations significantly more difficult.

Once the conditional licensee finds a location, navigates the zoning process, and obtains location approval from the IDFPR, it should receive an Adult Use Dispensing Organization license. Then, and only then, will the licensee be able to purchase and sell cannabis products. Applicants should begin researching the products that they want to sell and from where they will source those products. The Act requires licensed dispensaries to provide an assortment of products from a variety of sources—the inventory available for sale at the dispensary from a single cultivator must not exceed 40% of that dispensary’s total inventory.

In short, winning one of the 75 coveted conditional licenses is hard enough, but it is only the start. Applicants should begin laying the groundwork for successful operations as soon as possible, and we are here to help. Please check our blog for continued updates on developments affecting the cannabis industry, and stay tuned for our next post regarding options for Illinois dispensary applicants that do not receive a conditional license.

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