Update: Illinois Offers Object Lesson on Pros vs. Cons of Cannabis Business  

Suzanne Cosgrove

Suzanne Cosgrove

Editor

There can be both highs and lows in the cannabis business. The Reddit crew learned that lesson this week when they bought, then sold, stocks in the sector. The state of Illinois presents another example.

Illinois logged an impressive $669 million in retail adult-use cannabis sales in 2020, or about $1 billion in total sales for the year when you include medical marijuana sales. However, the mechanics of Illinois social equity and craft growers’ licensing continue to drag along as 2021 unfolds.

In the latest chapter of the licensing saga, Illinois‘ cannabis craft cultivation, infusion and transportation applicants (the ones that were not disqualified in their original applications filed months earlier) were recently given 10 days to submit supplemental responses for scored sections of applications, with a deadline of midnight last Friday.

There is no word on when the applicants, most of whom are minority small-business owners, will hear the state’s decision on who will ultimately receive the licenses. “Given that the supplemental submissions in many cases were more pages than the original submission, it’s likely that it could take another entire review process or more,” said Paul Magelli, president of the Illinois Craft Cannabis Association, a non-profit member group.

The ICCA has been in court over the past months trying to get the state of Illinois to issue the delayed licenses, originally promised July 1, by filing a request for a writ of mandamus that would have forced the issue. Magelli said the ICCA was back in court this week again with the appeal, but it was denied.

An assortment of  lawsuits also were filed last fall on behalf of applicants for illinois’ 75 social equity licenses to open cannabis dispensaries, a process that ended up with just 21 perfect application scores. As JLN reported previously, Illinois was the first state that had a legislature-driven recreational marijuana law with a legislative mandate to provide opportunities for socially disadvantaged populations.

Asked about the outcome of those lawsuits, attorney Jon Loevy, who represented some 70  dispensary applicants in one of the suits, said the state of Illinois has promised to send deficiency notices to social equity applicants and give them an opportunity to improve their scores by giving more detailed responses. After that there will be a rescoring process and then a lottery. A timetable for that process also was not announced. “I think everyone hopes they come soon,” he said.

Meanwhile, KPMG, the global audit, tax and advisory service firm, has kept the state of Illinois’ contract to score the licencing applications despite some criticisms from those trying to maneuver the ins and outs of the state’s licensing maze. KPMG scored the original applications, and many applicants blame the firm for at least some of the long-running delays in the process.

According to reporting by the Chicago Sun-Times that cited a February 4 contract amendment by the Illinois Department of Financial and Professional Regulation, KPMG is now getting a hefty $9.17 million to grade and re-evaluate dispensary applications, as well as $5 million to score the outstanding craft cultivation, infusion and transportation applications – the latter figures according to documents from the Illinois Department of Agriculture.

 

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