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PUBLISHER:  CANNABIS LAW REPORT

 

True to his word on the campaign trail, new Illinois Gov. J.B. Pritzker announced on May 4, 2019 the specifics of adult use legislation he would like to see pass the Illinois legislature this year. And it is loaded with a lot more than just 21+ and personal possession (up to 30 grams).

 

Some of the highlights include:

  • Adults may grow up to five plants at home in a locked room, away from public view and with the landowner’s knowledge and permission (if living in an apartment or other rental situation – litigation is currently pending in the state regarding condominium and homeowners’ associations);
  • Expungement of misdemeanor and Class IV felony marijuana convictions (estimated to result in 800,000 expungements);
  • No new large-scale commercial growers (look to small craft growers with a focus on inclusion for people of color becoming business owners in the industry);
  • A statewide program funded with $20 million for low interest loans to help support “social equity” in business ownership in the newly created market.

These provisions and others are consistent with the State’s goal of giving back to the communities that were most negatively impacted by the federal “War on Drugs.”

 

In describing the program, Gov. Pritzker stated that he wants Illinois “to have the most equity-centric law in the nation.” State Rep. Kelly Cassidy of Chicago, one of the plan’s legislative sponsors, is working to create a program that avoids “a small group of people getting very rich.”

 

For now, the proposed permit fees are $100,000 for cultivators and $30,000 for dispensaries. The State will also charge a “business development fee” equal to the lesser of five percent (5%) of total sales or $500,000 for cultivators and $200,000 for dispensaries. All such fees will also include lower options for residents from minority War on Drugs casualty neighborhoods.

 

Proposed taxes include a seven percent (7%) gross sales tax on cultivator sales to dispensaries. Consumers can expect to see sales taxes of ten percent (10%) on products with THC levels less than 35%; twenty percent (20%) for all cannabis infused products; and twenty five percent (25%) on products with THC levels greater than 35% (oil, wax, shatter and other types of extracts). The proposal also allows municipalities to add an extra three percent (3%) sales tax and counties to levy sales taxes of 0.5% (incorporated areas) and 3.5% (unincorporated areas).

 

Perhaps these “local” revenue streams will be enough to discourage municipalities from banning retail stores within their boundaries which they will be allowed to do for the first year of the program. After the first year, such a ban may only be imposed through a voter referendum.

 

The proposal is already getting push-back from a number of anti-adult use groups on religious, addiction, access to minors and other grounds. It’s also coming from a number of communities throughout the state that did not like the idea of medical marijuana and like adult use even less. In response to those concerns, Gov. Pritzker’s proposal prohibits all advertising near schools, playgrounds, public transit and public property. Also banned is any advertising that might appeal to minors and especially young children.

 

This is also true for packaging and labeling that must carry specific warnings about marijuana’s potential negative effects, including impaired cognition and that it may be habit forming. The packaging must be child resistant. While many of these rules and precautions are carryovers from the state’s medical program, they take on a new emphasis and importance with the sale of marijuana and THC products which is expected to significantly increase in an adult use market.

 

In terms of timing, a bill still needs to come out of the state legislature for Gov. Pritzker to sign. Then the various Illinois agencies will have to go through the state’s process for making new rules and regulations that will apply to the adult-use program followed by public comment periods, amendments, more comments, committee vote and finally consideration by the state House and Senate. While many of the steps can and will be expedited, the current consensus has the program becoming operational, at the earliest, sometime next summer.

 

The challenge for the state will be to see if it can roll out the program sooner than that and more efficiently than its handling of the application process for medical cultivation and dispensary licenses. Either way, after a long wait, Illinois’s cannabis market is finally headed in the right direction.

 

Larry Mishkin

Larry Mishkin is Counsel to Hoban Law Group and has nearly 30 years of experience that includes representing groups seeking marijuana dispensary and cultivation licenses in Illinois, as well as business interests ancillary to the medical marijuana market. Larry regularly consults with and counsels persons and groups looking for entry into the medical cannabis industry.  

This article has been prepared for informational and general guidance purposes only; it does not constitute legal or professional advice. You should not act upon the information contained herein without obtaining specific professional advice. No representation or warranty (express or implied) is made to the accuracy or completeness of the information contained in this publication. Hoban Law Group, its members, employees, and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based thereupon.