The dates are getting further into the rear view mirror. The Illinois Cannabis Regulation and Tax Act became law on June 25, 2019. Adult-use sales of cannabis began on January 1, 2020. Thousands of entrepreneurs, many of them qualified social equity applicants, submitted applications for new dispensary licenses on or before January 2, 2020. And hundreds more submitted craft grow, infuser, and transportation license applications on or before April 30, 2020.
We are certainly cognizant of the challenges 2020 brought. But as we sit here on March 12, 2021, with no new licenses having been issued, the excuses are growing more tiresome. Thousands of Illinois citizens invested their time and money (oftentimes with both in short supply) to seek entry into the Illinois cannabis market based on a promise of fairness, transparency, and social equity. Those promises have not been fulfilled.
The State’s initial dispensary scoring process was deeply flawed, and the State’s response to the numerous lawsuits that followed essentially confirmed that there was no justifiable way to defend the initial scoring process. Instead, the State gave applicants a chance to “correct” their applications in a supplemental deficiency round in pursuit of a “perfect” score. That supplemental submission process has now been ongoing for nearly six months with the submission date recently passing on March 5, 2021, but we are not sure the process will make things any better. The supplemental deficiency round was confusing—applicants were told how many points they lost on specific exhibits, but not the reasons for any deductions, and were forced to speculate as to how they should correct. Further, there was no margin of error as only a perfect score gets an applicant to the next stage of the process—a license lottery. Deficiency notice responses were also an additional cost, and for many applicants, potentially a sunk cost. As it currently stands, only veteran-owned dispensary applicants have a chance for a perfect score, leaving many qualified, non-veteran owned social equity applicants wondering why they participated at all. And who knows how long it will take to re-grade the thousands of submissions (there are rumors it could take up to four additional months), and whether the re-grading process will be better than the initial grading process. Finally, it is unclear how or whether the re-grading process addresses many of the issues raised in litigation, which means there will likely be additional delays after the new scores are issued.
Craft grow and infuser licenses are wallowing in similar uncertainty. Following the problems with the dispensary grading process, and likely in anticipation of additional litigation related to its scoring efforts, the State initiated a broad deficiency process for the craft grow and infuser applications. It was a miscalculated overcorrection that is almost assured to result in further delays. The State graded all the exhibits but did not issue the scores. Instead the State sent each applicant a confusing deficiency notice that identified the exhibits and measures for which the applicant did not receive “full points,” but did not explain further. As such, applicants were left to wonder whether they lost one point or 20, and for what reason, and then were given only ten days to try to correct that. And, again, layered on top is the additional delay (for all license types)—licenses were supposed to be issued in the middle of last year and no one currently has any idea when that will actually happen.
There is nothing the State can do about what has happened so far. But it can and should take steps going forward, and do so promptly. It should do whatever is necessary to accelerate the re-scoring process so that applicants become licensees sooner rather than later. It should be transparent about the process and associated timelines. It should ensure that non-veteran social equity applicants are not boxed out of the market, and we recommend it do so by awarding more dispensary, craft grow, and infuser licenses. Why not issue 250 rather than 75 dispensary licenses, or 100 craft grow licenses rather than 40? And it should find creative ways to give these new licensees a jump start as they try to compete against entities that become more established by the day. We recommend, for instance, that the State waive certain licensing fees for new entrants, and allow craft growers to immediately build out to 14,000 square feet of flowering canopy.
Illinois’s Cannabis Regulation and Tax Act generated significant, well-deserved fanfare as a model for socially equitable reform. It has not lived up to its promise, but all is not lost. Let’s go Illinois.