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Pritzker announces partial do-over of cannabis dispensary application process

Tuesday, Sep 22, 2020

[Bumped up from late yesterday afternoon for visibility.]

* Press release…

Following a careful examination of the process to award the first round of conditional adult-use cannabis dispensary licenses after receiving feedback from community leaders and stakeholders, Governor JB Pritzker and the Illinois Department of Financial and Professional Regulation (IDFPR) announced additional steps to ensure the process moves forward in a fair and equitable manner. These steps will ensure applicants whose applications did not achieve the maximum score of 252 points will receive a supplemental deficiency notice and a score sheet identifying each exhibit to the application on which they lost points. After receiving the supplemental deficiency notice, applicants will have an opportunity to provide a response that amends the application exhibits or to ask IDFPR to conduct a rescore of their original application exhibits if they believe there was an error or an inconsistency in the scoring.

“As we worked with the General Assembly, equity and fairness have always been at the heart of our approach to legalizing cannabis, and when we heard significant concerns from numerous stakeholders about the process to award dispensary licenses, I said we needed to take a pause to fix their concerns, within the bounds of our landmark law,” said Governor JB Pritzker. “While this process remains a marathon and not a sprint, we believe that these new steps will inject more equity and fairness in the first round of license awards and provide insight as we improve the process for future rounds.”

The supplemental deficiency notices and score sheet will notify applicants which application exhibits did not receive a perfect score. For each exhibit, an applicant can either submit additional information, request a rescore of the exhibit, or do nothing and keep the original score on that exhibit.

IDFPR will review all timely responses to the supplemental deficiency notices and will issue a final score for each application. The Department will then conduct the lottery for Conditional Licenses in accordance with its tiebreaker rules. The Department will provide detailed instructions for applicants, including all deadlines, in the coming weeks.

“The Pritzker administration continues to work towards creating the most equity-centric cannabis industry in the nation. From day one of the administration’s work with the legislature, equity has been at the center of this legislation from day one of negotiations as we worked to create a system that prioritizes social equity applicants and reinvests revenues in communities hardest hit by the war on drugs,” said Toi Hutchinson, Senior Advisor to the Governor on Cannabis Control. “Before awarding the next 110 dispensary licenses, as the statute requires, the State will conduct a disparity study to better understand how this new industry is working and correct any structural challenges to equity as we move forward in implementing the law.”

This supplemental process is designed to ensure the Cannabis Regulation and Tax Act is implemented in a fair and equity-centric manner as intended by both the administration and the General Assembly and will be conducted in accordance with the Act. Applicants will not be permitted to change the owners or ownership percentages identified on their original application in an attempt to qualify for social equity status, Illinois resident ownership status, or veteran ownership status if the original owner or group of majority owners on the application did not fall into those categories. The points allocated for these categories are outlined in the Act and, therefore, can only be changed through the legislative process.

Following the awarding of the first 75 licenses, the Act provides that IDFPR must conduct a disparity study, which will be a comprehensive evaluation of the adult-use cannabis market. Based on the results of that study, additional measures will be proposed to further improve equity and inclusion in the market. The administration has already suggested steps for the General Assembly to take to improve the process going forward, including providing that all applicants who meet or exceed a cut-off score will advance to the lottery and limiting the number of applications one entity can submit.

IDFPR received 2,588 cannabis dispensary applications from 937 applicants, more than double the number of dispensary applications that have been submitted to any other state awarding a limited number of dispensary licenses. The applications also far surpass the 221 applications submitted to the state for medical cannabis licenses in 2014. The vast increase in the number of applicants reflects the significant steps taken in the Act to ensure a wide variety of applicants were given an opportunity to participate in this new industry.

In 2019, Governor Pritzker signed the Cannabis Regulation and Tax Act into law, the most equity-centric cannabis legislation in the country. In addition to committing to conduct a disparity study, the administration offered lower application fees, low-interest loans, and informational workshops on cannabis-related licenses to social equity applicants. The administration remains committed to upholding the intent and language of the law and ensuring the cannabis industry is equitable for all Illinois residents, regardless of background.

Under this new law, 25% of revenues collected from recreational cannabis sales are being directed to communities that have been disproportionately impacted by the justice system through the Restore, Reinvest and Renew (R3) Program. The innovative R3 program recently announced $31.5 million in grant opportunities to organizations working in historically underserved communities across Illinois.

Governor Pritzker is also working with State’s Attorney Kim Foxx, the Prisoner Review Board, and state’s attorneys across Illinois to expunge the records of non-violent offenders with a cannabis related conviction, with over 11,000 Illinoisans already seeing their records expunged.

For more information on the adult-use legal cannabis industry, go to https://www2.illinois.gov/cannabis/Pages/default.aspx.

- Posted by Rich Miller        

15 Comments
  1. - AgentOrange - Monday, Sep 21, 20 @ 5:03 pm:

    Doesn’t sound like the Gov’s staff solved for the veteran points Easter egg conundrum. In order to receive a perfect score, an applicant has to be 51% owned by a veteran. The regs only allow a lottery to decide among tied scores. Since there are currently several perfect scores, the only applicants eligible for the lottery would, therefore, be any other groups that also have perfect scores.


  2. - Ummm - Monday, Sep 21, 20 @ 5:04 pm:

    Yeah AgentOrange, the Governor cannot solve for something that’s written into the law. Sounds like a problem the General Assembly is going to have to address.


  3. - Frumpy White Guy - Monday, Sep 21, 20 @ 5:29 pm:

    100% of all Licenses should be held by victims of Systemic Racism. Rich white Republicans don’t need to hold these licenses.


  4. - Precinct Captain - Monday, Sep 21, 20 @ 5:55 pm:

    1) why was scoring outsourced to KPMG?

    2) why were KPMG insiders allowed to apply for licenses?

    3) what evidence is there that KPMG had any internal controls to prevent insider dealing?

    4) will the administration attempt to claw back funds paid to KPMG, particularly considering that KPMG clearly failed to execute the application and scoring process in an unbiased and fair manner, and put the state at massive financial risk from litigation?


  5. - Hmmmmmmmmm - Monday, Sep 21, 20 @ 6:15 pm:

    Can’t wait to see the lawsuit settlements from this blunder.


  6. - Huh? - Monday, Sep 21, 20 @ 6:29 pm:

    “Can’t wait to see the lawsuit settlements from this blunder.”

    Here’s your pot license.


  7. - Unfair tacticts - Monday, Sep 21, 20 @ 7:20 pm:

    The overall process was wrong. The laws written need to be addressed too. I guess they thought we were going to just deal with unfair treatment and not address the manny issues at hand.


  8. - Unfair Tactics - Monday, Sep 21, 20 @ 7:29 pm:

    The lawsuits note the law that allowed recreational marijuana sales in Illinois set a goal to diversify industry ownership with “social equity” applicants from areas disproportionately impacted by the war on drugs, or those who had been arrested or convicted of minor cannabis crimes.

    “One hundred percent of the new dispensary licenses will be distributed to members of one group—military veterans. Military veterans were never identified, lauded or supported by empirical evidence to be a group that was adversely impacted by the war on drugs or required a leg up in the Illinois cannabis industry, let alone one that deserved a monopoly,” according to a suit filed in Sangamon County, home to the state capital, on behalf of seven unsuccessful applicants.


  9. - Elliott Ness - Tuesday, Sep 22, 20 @ 7:04 am:

    Good to admit flaws in thinking, hope the trend continues and he takes another look at other errors…he is accumulating quite a list. Not sure IDES has been corrected and his COVID plan treated various regions differently ( purely political until called on it). He meds a better team


  10. - Anon - Tuesday, Sep 22, 20 @ 8:33 am:

    They all knew the rules when they applied. The rules were agreed to by all of the stake holders. It’s typical Illinois BS. I didn’t win so I’m going to take it to court.


  11. - frisbee - Tuesday, Sep 22, 20 @ 10:06 am:

    If there wasn’t a limit on the number of licenses they wouldn’t have this problem. Set a minimum requirement by the state to open a pot shop, get the local zoning approval and let the market dictate the winners and losers. Making it hyper restrictive and limited only benefits the uber wealthy and connected. The reason that Illinois has some of the highest prices in America is because the supply is so limited and the amount of shops so few that consolidation was bound to happen as the big fish gobbled up the stores that weren’t vertically integrated. A do over might appease some folks but it really doesn’t address the underlying problem of an artificially limited market.


  12. - Perrid - Tuesday, Sep 22, 20 @ 10:54 am:

    Lol Precinct Captain, take it easy for a moment there before cutting off KPMG’s head. The 1 (read that again, ONE) business that is partially owned by 1 (there’s that number again, ONE, which if you think about it means that you should have used “insider” instead of “insiders”, though I know that doesn’t feed your implicit argument that the process was corrupt) employee of KPMG is NOT the reason why many, many dozens of businesses were rejected.

    Make the GA write a better law if you’re so mad about it.


  13. - XonXoff - Tuesday, Sep 22, 20 @ 11:26 am:

    I’m just an aging white semi-retired professional who’s run a couple successful businesses, worked my tail off, paid all my Illinois taxes over 45+ years, never been convicted of anything, never joined the military, and lived outside city limits most of my life.  I couldn’t qualify to participate in this… project, without stacking the deck so I’ve resolved myself to just sitting back and watching them push their “new industry” chain around, while the chosen few enjoy selling into a vacuum from their early monopoly positions.

    …and the occasional comment about it all on CapFax, of course.

    I have no constructive suggestions on this thing they are creating.


  14. - c - Tuesday, Sep 22, 20 @ 12:53 pm:

    The whole situation is laughable. The rules established for “social equity” eliminate virtually all members of one particular race….and that was their objective. They are trying to establish a quota system without it looking like they have established a quota system. Free market capitalism remains the best means to optimally allocate scarce resources (including cannabis licenses). Anyone who thinks that JB and his merry band of hucksters are going to develop an equitable method for dispensing licenses is indulging in the target product.


  15. - Rich Miller - Tuesday, Sep 22, 20 @ 2:49 pm:

    ===The rules established for “social equity” eliminate virtually all members of one particular race===

    If true, it didn’t work. lol


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