Special Report: The State of the Illinois Medical Marijuana Market

Special Report — An MJ News Network Exclusive

ILLINOIS:  January 1 marked the start of the Compassionate Use of Medical Cannabis Pilot Program, though it could be a year or more before Illinois begins to see its first medical marijuana sale. Provisional regulations have been laid out and applications for licenses to cultivate and dispense cannabis will not be issued before spring; more likely summer. Patients wishing to purchase medicine will have to wait until fall to apply for licenses that are likely to be issued in early 2015.

Unfortunately patients will have to wait an entire year to purchase the medicine they need, so having a medical card now would be of no use. Even though the licensing requirements for patients were released weeks in advance of cultivation and dispensary guidelines, there will be nothing available to patients until cultivation centers have the proper amount of time to grow and harvest medicine, sell to the dispensaries and make it available for purchase. Based on the initial guidelines, it may be very difficult for these businesses to get up and running.

The two major obstacles that Illinois cannabis businesses will face: cost and ability to acquire proper zoning.

In addition to building a cultivation center and all of its necessary security requirements, anyone applying for a cultivation permit must have $2 million in escrow or bond. A retail dispensary is required to have proof of liquid assets in the amount of $400,000.

Permit costs are also astronomical. Cultivation centers will have to fork over $200,000 for a permit. This is upon approval of an application, for which business owners are required to include a $25,000 non-refundable application fee. Each annual renewal of a cultivation center permit will be $100,000.

Similar fees and extensive application procedures are required for the 60 potential dispensaries dispersed across the state, including application fees of $5,000 and permit fees of $30,000. Annual license renewal is $25,000.

When it comes to locations, the state has been generous in its allocation of its 43 districts, especially in the city of Chicago. But these businesses will face problems when it comes to finding an available storefront that resides at least 1,000 feet from any school or daycare facilities and just as importantly, has the neighborhood’s support.

Then there is the application itself.

Cultivation centers require a 23-line item application, plus a notarized statement. Line items include projected expenditures and annual revenue; zoning authorization; map and plot plans; and “the identity of every person, association, trust, producer backer, partnership, other entity or corporation having any direct or indirect pecuniary interest in the cultivation center operation with respect to which the registration is sought.” Cultivation applications are due 30 days after the acceptance date begins, which will be announced on the Department of Agriculture’s website.

The application for dispensaries is possibly even more difficult, requiring 19 line items, many with sub-requirements. This is in addition to financial disclosure, multiple statements and attestations, and documentation of liquid assets. The 19 line items include proposed operating by-laws, a business plan, security plan, inventory control plan and recordkeeping plan. Even this application is not all-inclusive, as submissions must include a “statement that dispensary organization agrees to respond to supplemental requests for information from the Division.” To top it off, the Division will only accept applications for 10 working days following the dated indicated on the Division’s website.

Due to the extensive nature of the applications and tight deadlines, it is vital that cannabis businesses enlist the help of professionals to safeguard the likelihood of receiving a permit. Working with a knowledgeable consultant throughout the process will ensure a complete application, leaving no questions unanswered. A consultant will help businesses begin collecting information immediately, so that when dates are announced, businesses will be prepared to submit applications at the outset of the application period.

The Departments of Agriculture, Financial and Professional Regulation, and Revenue are now closed for public comment. Official regulations are expected to be released May 1.

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