In May 2019, Illinois legalized recreational cannabis — effective January 1, 2020 — through legislation, as opposed to a ballot initiative like most states. A key aspect of the Cannabis Regulation and Tax Act is social equity, which aims to bring individuals that have been disproportionately impacted by the War on Drugs into the legal cannabis market. This goal is so important that qualifying as a “social equity applicant” accounts for 20% of each applicant’s score for the four new sets of licenses authorized by the act: dispensary, craft grow, infuser and transporter.
In an effort to balance the social equity objective with quickly creating a retail market, the act permitted existing medical marijuana licensees to convert their dispensaries into dual-use stores that can sell recreational marijuana. Further, these existing medical marijuana dispensaries were also allowed to open a second retail location.
While creating a legal market for recreational marijuana is never an easy proposition, the rollout in Illinois has not been particularly smooth. Most notably, the new dispensary licenses authorized under the act have still not been issued despite a deadline of May 1, 2020, and the other licenses only recently began to be issued despite a July 1, 2020, deadline. The delay in issuing the licenses was largely fueled by outrage and lawsuits in the wake of Illinois announcing that, of the hundreds of applicants, 21 dispensary applicants had perfect scores and would be entered into a lottery for the 75 available licenses. These lawsuits included allegations of insider connections to many of the 21 “winners,” as well as inconsistencies in application scoring and a de facto requirement of being a military veteran.
Faced with numerous lawsuits, Illinois initiated a process that allowed applicants to correct certain problems with their applications. In addition, the State General Assembly passed House Bill 1443, which Governor J.B. Pritzker signed into law on July 15, 2021, authorizing the issuance of 110 new recreational dispensary licenses. The state then conducted three separate lotteries to determine dispensary license winners, although those licenses are currently stayed from being issued until related litigation is resolved.
Despite these setbacks, the state continues to set sales records practically every month. For the first half of 2021, Illinois has already eclipsed $626 million in recreational sales, which is almost as much as all of 2020.
Douglas R. Sargent | Greenspoon Marder