Illinois Gov. J.B. Pritzker made history today by signing a bill legalizing the adult use of cannabis in the Land of Lincoln. Pritzker might as well fire a starting gun.
The race is now on to get about 55 Illinois adult-use stores open, serve potentially millions of customers, and dismantle the decades-old drug war machine. Aspiring retailers have just weeks to apply for licenses. Illinois state agencies must immediately start creating programs to license them. People currently facing low-level marijuana charges can petition to have cases dropped effective immediately.
To give you an idea of how far we’ve come: California’s 1996 medical marijuana law, the nation’s first, could fit on a postcard. The bill signed into law by Pritzker today ran to more than 600 pages.
We read the entire 610-page bill so you don’t have to. Here’s what happens next in a legalized Illinois.
Stores Open Jan. 1, 2020
- The first wave of retail sales will occur at existing medical cannabis dispensaries that obtain a license allowing them to expand into adult-use sales. As many as 55 dispensaries could have adult-use licenses by Jan. 1.
- Only adults 21 and older with valid ID may purchase.
- Taxes will run about 25% at the register (including 7% cultivation, 10% state sales, 3.75% county sales, and 3% city sales).
- Products on sale will initially be sourced through the state’s medical cannabis system and its producers.
- Illinois’ 67,000 qualified patients will have cannabis reserved for them, as well.
Personal Rights Kick on Jan. 1, 2020, Too
- Illinois residents age 21 and over can possess up to 30 grams of flower(that’s about one ounce), 5 grams of hash, and edibles with up to 500 mg of cannabis’ main active ingredient, THC. For out-of-state visitors the limits are a little more strict. You’re limited to 15 grams of flower.
- Adults 21 and older with valid ID can legally buy cannabis, drive it home, and enjoy it. You can’t smoke it in public, or in a car, or in your condo if your condo association prohibits it. This will probably be on the agenda of a lot of condo associations at next month’s meeting.
- Home growing is limited to medical cannabis patients only.Recreational cannabis gardening can get you a fine of up to $200 for up to five plants.
- Underage possession comes with consequences. If you’re under 21, you’re looking at up to a $200 fine and a misdemeanor for possessing cannabis. Non-licensed marijuana sales are still a felony. Driving while intoxicated remains illegal. Bosses can keep drug testing people and fire anyone they reasonably suspect of being stoned on the job. If you furnish cannabis to someone under 21, you’re looking at a minimum $500 fine, and if someone gets hurt, a felony. Interstate traffickers still risk a Class X felony, $200,000 in fines, and more prison time than some rapists or murderers.
Criminal Justice Savings Start Immediately
- Illinois police made 32,773 marijuana arrests in 2016, 42% of all drug offense arrests. Those arrest numbers should collapse.
- If you were arrested in the past year for under 30 grams of marijuana you can petition the court to have that arrest expunged. We’ll have more details on that soon.
- If you’re in jail, prison, or on probation or parole for a minor cannabis crime you can also petition for an expungement. The state has to notify you that you’re eligible. Some folks will get out of jail or get off probation.
- In 2020, state police must begin annual automatic expungements of old records. An estimated 770,000 records could be expunged eventually.
- Parents can’t be deemed negligent for cannabis use alone.
- Pediatric medical cannabis patients can take their epilepsy meds at public schools.
The Adult-Use Market Rapidly Ramps Up
- Jan. 1, 2020 is just seven months away—the blink of an eye in bureaucratic timeframes. At maximum capacity, by the year 2025, Illinois might have 500 stores, 30 big farms, 150 craft farms, hundreds of infusers, and more.
- Adult-use licensing runs on the rails laid down by the state’s medical cannabis system. In July, the state is expected to spend $17 million powering up the Cannabis Business Development Fund. State officials also must craft and release an application for the state’s 55 medical cannabis dispensaries to serve the first adult use customers.
- Fees, taxes, licensing, and mandatory donations run into several hundred thousand dollars for dispensaries that want to sell adult use. Double that amount to pay for the personnel to navigate the bureaucracies.
- Still, incumbent licensees that pay to play get first crack at serving Illinois’ roughly one million regular cannabis consumers.
“The existing license holders should have the opportunity to do quite well,” said Illinois dispensary operator Kris Krane, a Chicago-based national cannabis regulations expert and president of 4Front Ventures. “I’m not really hearing any complaints about how much they’re going to have to spend to participate in the adult use market.”
Unprecedented Equity Provisions
Opening a licensed cannabis store in the US is not like opening up a lemonade stand. Cannabis remains a federally illegal Schedule I controlled substance. Opening a store is a major commercial real estate undertaking that requires substantial capital—in the millions, not thousands—and a sharp legal team. Selling cannabis is but one skill of hundreds that any team needs.
Consequently, the folks who sold illegal marijuana—and got busted for it—are often among the most disadvantaged when it comes to obtaining a license to sell legally.
HB 1438, the bill signed into law today, blunts the discriminatory effects of heavy regulation and fees with a slew of grants, carve outs, community college courses, business incubators, sponsorships, and diversity bonus points for licenses applicants. Illinois will pay for it out of the deep pockets of incumbent players.
- The first adult use cannabis sellers must surrender 3% of annual profits (up to $100,000) to equity regulators, and incubate disadvantaged entrepreneurs with physical space or loans of $200,000.
- License applicants get bonus points for being veterans, diverse, Illinois residents, environmentally minded, union organized, and community organizers. Paging, Barack Obama.
- One quarter of all cannabis tax revenue—less regulatory costs—is earmarked for a new state program dubbed Restore, Reinvest, Renew (R3), good for tens of millions of dollars in grants to community groups to decrease gun violence and concentrated poverty.
Adjustments and Annual Reporting
Lastly, the new Illinois law should prove to be more flexible than most, due to the fact that it was created through the state legislature and not via a statewide ballot initiative. By 2021, state agencies must make public reports on the program’s status and progress toward its goals. There are mechanisms built into the law that allow lawmakers and regulators to fairly easily increase or decrease taxes, fees, and license allocations.
In many ways, Illinois has set the template for the legalization bills coming to future states in the Midwest and East Coast.
“This makes it a lot easier for Rhode Island and Connecticut and New York and New Jersey,” said Krane. “You needed one state to get this done to give a little push to some of these other states. I think we’re going to start seeing a wave of these states over the next couple of years now.”
|Illinois Legalization Implementation Timeline|
|June 25, 2019||Governor signs bill|
|State officials release application for Early Approval Adult Use Licenses|
|Cities start thinking about local votes to ban|
|Dispensaries and farms have 60 days to apply to sell or grow adult use cannabis|
|Emergency rulemaking begins at Dept of Agriculture and others|
|Illinois State Police must identify cases eligible for expungement and notify defendants|
|Illinois State Police must begin automatically expunging small-time marijuana arrest records older than one year, if no charges were filed|
|Summer ’19||State loans itself $17M to start Cannabis Business Development Fund|
|Dispensaries submit applications for Early Approval Adult Use Licenses|
|Medical cannabis farms submit applications for Early Approval Adult Use Cultivation Center license|
|Departments have 60 days to approve a complete application for a store or farm|
|DUI Task Force created|
|Fall ’19||Cultivation taxes kick in 7% in September|
|Adult Use Dispensing Organization License Application out by Oct. 1|
|Early Approval farms start selling to Early Approval stores on Dec. 1|
|Dispensary staff must complete Responsible Vendor Program by Dec. 1|
|ISP must approve or deny expungement petitions within 60 days of receipt|
|Courts must expunge records within 60 days of order|
|Permanent rulemaking deadline for Dept of Agriculture, others|
|Jan. 1 2020||Adult Use sales start at up to 55 dispensaries and/or their secondary site|
|Personal rights kick in for possession, consumption, transportation, etc.|
|“Purchaser” taxes begin 10% state (+15% for hash)|
|Counties and cities can begin imposing taxes in small increments, capped at 3.75% county, 3% city|
|Infused license application and Transporter application released|
|Potential local votes on taxes, bans|
|Adult Use Dispensing Organization License Application window closes|
|Q1 2020||Up to 75 Conditional Adult Use Dispensing Organization licenses issued by May 1 (47 in Chicago area)|
|Community College Program application available by Feb. 1|
|Infuser license application deadline is March 15|
|Q2 2020||Potential local votes on taxes, bans|
|Dept of Agriculture begins assessing medical cannabis supply levels quarterly|
|Growers must begin using a licensed Transporter|
|Q3 2020||Up to 40 Craft Cultivation licenses issued|
|Community College Program applications due by July 1|
|Up to 40 Infused licenses issued by July 1|
|Transporting licenses issued by July 1|
|Up to eight Community College Program licenses Issued by September|
|DUI Task Force recommendations due|
|Jan. 1 2021||Early Adult Use licenses start expiring|
|60 more Craft Farm licenses could be approved|
|Community College Courses could start|
|Annual program reporting requirements begin|
|Program adjustments to fees and license allocations can begin|
|March 31, 2021||Social Equity Inclusion Plans must be completed|
|Disparity and availability study must be commissioned|
|Q3 2021||Equity report due by September 30|
|60 more Infused licensees could be approved by December 2021|
|60 more Craft Farm licenses could be approved by December 2021|
|Up to 110 more Conditional Adult Use Dispensing Organization licenses issued|
|DUI Task Force dissolves|
|2022||More Craft Growers could be approved (max 150)|
|Automatic expungements by ISP|
|Early Adult Use Dispensing Organization licenses expire March 31|
|Number of shops, farms, infusers, as well as fees can be modified by Department|
|2023||Automatic expungements by ISP (Records from 2000 to 2013)|
|Fees modifiable directly by department, instead of legislature|
|Assessment of costs of raw materials for infusers|
|2024||Annual reporting on overall program efficacy plus consumer access, and diversity reporting|
|2025||Automatic expungements by ISP (records prior to 2000)|
|Annual reporting on overall program efficacy plus consumer access, and diversity reporting|
|Number of stores could reach maximum 500 in state|