What Are the Cannabis Licensing Requirements in Illinois? (May 2024)

The Land of Lincoln has been making significant strides in cannabis legalization in recent years. From medical use to full adult-use legalization, Illinois has seen a transformation in its cannabis laws. Whether you're a potential business owner looking to enter the cannabis industry or an individual interested in the legal aspects of cannabis use, understanding the licensing requirements is crucial. In this blog post, we'll delve into the evolving landscape of cannabis licensing in Illinois.

Medical Cannabis in Illinois

Illinois took its first step into the world of legal cannabis in 2014 when it legalized medical cannabis. To qualify, individuals must be diagnosed with a “debilitating medical condition” by a licensed physician. They are allowed to possess a maximum of 2.5 ounces of usable cannabis within a 14-day period.

Interestingly, in August 2018, Illinois passed a law allowing medical cannabis as an alternative to opioids for certain medical conditions, providing patients with an option to seek relief from cannabis instead of prescription painkillers.

Adult-Use Legalization

The most significant change came on June 25, 2019, when Governor JB Pritzker signed the Illinois Cannabis Regulation and Tax Act (HB 1438) into law. This groundbreaking legislation legalized adult usage and purchase of cannabis. Here are the key provisions:

• Illinois residents aged 21 and older can possess up to 30 grams of cannabis flower, 5 grams of cannabis concentrate, and 500 milligrams of THC in products like edibles.
• Visitors to Illinois are allowed to possess half these amounts.
• Unlike medical marijuana patients, adult users are not permitted to grow marijuana at home.
• HB 1438 established a $30 million loan program to assist social equity applicants with startup costs in the cannabis industry. These applicants must qualify based on being in a disproportionately impacted area and having a cannabis charge expunged due to the new law.

Cannabis Licensing Requirements

On June 25, 2019, Illinois achieved a significant milestone as it became the 11th state to legalize recreational cannabis. Notably, it was the first state to do so through legislation rather than a ballot initiative. This historic moment was made possible by the enactment of the Cannabis Regulation and Tax Act, which officially ushered in recreational cannabis sales to adults aged 21 and older on January 1, 2020.

Initially, the new law allowed the 55 existing medical marijuana dispensaries, which had been legal in the state since 2014, to apply for adult-use retail licenses. This permission allowed them to sell recreational cannabis from their established medical dispensary locations. Moreover, these dispensaries were also granted the opportunity to apply for licenses to open second retail locations.

The Illinois Cannabis Regulation and Tax Act paved the way for a total of 75 legal licenses for recreational cannabis dispensaries in Illinois. However, an important development occurred on July 15, 2021, when Governor JB Pritzker signed HB 1443 into law. This legislation created an additional 110 social equity licenses through two lotteries, with the aim of promoting greater diversity and equity in the cannabis industry. These social equity cannabis licenses were subsequently issued in 2022, with the expectation that these dispensaries would gradually commence operations in 2023.

The responsibility for overseeing the cannabis licensing process fell under the purview of the Illinois Department of Financial and Professional Regulation (IDFPR). Unfortunately, the licensing journey was fraught with challenges from the outset. State regulators were compelled to conduct a second lottery to select licensees in 2020 after the initial drawing became mired in allegations of corruption and incompetence. Governor Pritzker responded by signing additional legislation in 2021, authorizing 185 more social equity licenses through two new lotteries. However, this effort encountered a roadblock when dispensary owners raised concerns about the constitutionality of the licensing process, leading to a regulatory standstill.

It was not until November 10, 2022, more than a year after the second lotteries, that state officials successfully resolved the legal challenges and commenced the awarding of finalized social equity licenses. As of June 2023, a total of 136 dispensaries had received licenses to operate across the state of Illinois, as confirmed by state regulators.

Now, let's dive into the application fees and license costs associated with obtaining an adult-use cannabis retail license in Illinois:

• For regular (non-Social Equity) applicants, there is a non-refundable application fee of $5,000.
• If approved, the cost for an Adult Use Dispensing Organization License, which is valid for a two-year period, is $60,000.

For applicants who meet the Social Equity criteria:

• The application fee is reduced to $2,500.
• The cost of an approved two-year license is $30,000.

These fees and costs play a crucial role in the licensing process and contribute to the regulatory framework governing the cannabis industry in Illinois.

Taxes and Regulations

The legalization of cannabis also brought about taxation. An excise tax of 10% is imposed on products with less than 35% THC, while a tax of 25% is applied to products with higher THC concentrations. These taxes contribute significantly to the state's revenue.

Expanding Retail Opportunities

Despite these licensing challenges, Illinois has seen remarkable success in its cannabis industry. In 2020, the state recorded over 1 billion dollars in legal marijuana sales, combining both medical and recreational sales, and collected over 205 million dollars in tax revenue.

Future Changes

In March 2022, HB 4116, aimed at amending the Right to Privacy in the Workplace Act, was making its way through the legislative process. If passed, it would provide additional protections for employees who test positive for THC and prohibit employers from taking adverse action solely based on a positive cannabis drug test.

In conclusion, understanding the cannabis licensing requirements in Illinois is vital for both potential business owners and individuals interested in cannabis use. The landscape is continually evolving, with changes aimed at balancing the interests of public health, revenue generation, and individual rights. Stay informed and stay compliant as the cannabis industry in Illinois continues to grow.