5 Things to Know About Applying for an Illinois Cannabis Business License

In 2020, Illinois welcomes 420 by becoming the 11th state in the US with legalized adult-use cannabis consumption. With millions of state residents— and tourists who’ll be even happier to blow into the Windy City—it’s estimated Illinois will become a $2 billion market.
Projected as a beacon that will light up the Midwest industry, the new Illinois market offers entrepreneurs the opportunity to show off the heritage of food, farming and creative crafts of the region—bringing a fresh new style to the cannabis industry while expanding destigmatization.
If you’re aiming to get an Illinois cannabis business license, now is the time to bear down on your plans.
With limited licenses available, every detail is important to stand out from the stacks of applications.
We took a deep dive into the 600 page bill, HB 1438 – The Cannabis Regulation and Tax Act, to find the essential information for entrepreneurs and small businesses to apply for Illinois licenses, and here’s what we found:

1. Medical Dispensaries Will Be Dosing Out Mentorship

Existing medical dispensaries will be the first to open adult-use sales after the stroke of midnight on December 31, 2019. All 55 current locations can already apply for an ‘Early Approval’ adult use license for current and second locations.

Since this gives Early Approval dispensaries months of a significant advantage before new dispensaries open, they’ll pay a $30,000 application fee and are required to contribute 3% of their current sales to a Cannabis Business Development (CBD) fund.

Outside of profits, these license holders will also be required to support the success of small businesses with options that could include grants to a cannabis job training program, funding cannabis education at a community college, or taking part in incubator programs that include mentorship and loans to a future cannabis license applicant.

As you form your cannabis business start-up, look to the Early Approval dispensaries for possible mentorship, training and funding opportunities—their wisdom and support will be invaluable.

2. The Strength of Diversity Adds Up

The Illinois program also includes requirements from aspiring new cannabis businesses to ensure the development of an inclusive market. Applications must include a well-written diversity plan that outlines how your cannabis business will ensure they offer equal opportunity for positions within the company—including your management and contractors. To earn points for Illinois residency, Veteran status and Social Equity status, the qualifying applicant must have at least 51% ownership.

Each application will be scored with a total of 250 points available on topics in almost every area of business—security plans, environmental plans, business experience and more. Here’s the breakdown of how dispensary applications will be scored:

    • Employee training plan: 15 pts
    • Security and record keeping: 65 pts
    • Business, operating and floor plan: 65 pts
    • Knowledge and experience: 30 pts
    • Social equity applicant: 50 pts
    • Employment practices: 5 pts
    • Environmental plan: 5pts
    • Illinois owner: 5pts
    • Veteran status: 5pts
    • Diversity plan: 5pts

Plus, 2 bonus points will be awarded for businesses that include a community engagement plan.

3. The Leaf Has Been Weeded Out

Like other states, Illinois will have its own rules on the design of logos, packaging and marketing of recreational cannabis. Warning statements are required on every cannabis product and dispensaries will be required to post specific signage to abide by new laws.

The rule with the biggest impact — no images of a cannabis leaf will be permitted on packaging, advertising or promotional materials.

Without the marijuana leaf symbol, cannabis businesses will need to be more creative with their logo design, branding and packaging in order to stay compliant.

Packaging must also be be child-resistant and light resistant, and it can’t resemble candy or any other design that might appeal to children. And, it’s best to stay away from ‘parody’ designs based on existing (and copyrighted) products or brands unless you really like dealing with lawyers.

4. Social Equity Candidates Encouraged

In many State programs across the US, anyone busted for possession has also been excluded from benefiting from legal pot due to their criminal record. Since the legal market would not exist if not for the knowledge and advocacy of these folks, it’s important that they’re able to reenter the market they helped develop.

Illinois’ bill will expunge around 800,000 possession conviction records and a quarter of cannabis tax revenues will benefit impacted communities. Eligibility for ‘Social Equity Status’ in Illinois includes cannabis businesses who have at least 51% ownership, or at least 10 employees, who live in a ‘disproportionately impacted area’, among other requirements.

Qualified applicants will get support from the Cannabis Business Develoment fund (CBD) through business-building resources like incubator and training programs, as well as financial support through reduced application and license fees, low interest loans and grants.

Show Off Your Brand’s Brilliant Intentions

We created a step-by-step guide to simmer your plans and ideas into concentrated Vision and Mission Statements that tell your brand story.

5. Expect Steep Competition

During the first wave of license applications in 2020, only 195 new businesses will be awarded a provisional operating license, and everyone else will need to try again next year. There are four different cannabis business functions that licenses will be available for:

– Dispensaries
– Craft Growers
– Infusers
– Transporters

While it appears that dispensary owners can have multiple licenses and share their premises with craft growers and infusers, it’s important to note that dispensaries cannot enter into exclusive agreements with growers and infusers.

Products offered must have variety—a maximum of 40% of dispensary sales can come from one single supplier.

Here’s a rundown on each license type:

DISPENSARIES

Up to 75 dispensing licenses will be issued in the first wave, and these will be dispersed throughout Illinois, with a cap on the number of dispensaries in each geographic area.

47 licenses will be issued in the Chicago / Naperville area, but many regions, such as Bloomington, Springfield or Champaign, will only have one license available.

Successful applicants will have six months to identify a physical location for their retail storefront.

Dates:

Wave One Applications open:
October 1 – December 31, 2020

Wave One Licenses awarded:
May 1, 2020

Wave Two Licenses awarded:
December 2021

Fees:

Non-refundable application fee:
$5,000

Annual License fee:
$60,000

CRAFT GROWERS

Craft growers are defined as those with less than 5000 sq ft of space for flowering plants.

Up to 40 craft grower licenses will be awarded in 2020, with another 60 available in 2021. Craft growers may be able to expand their space in future years.

Larger grow operations are labeled as ‘Cultivators’ in this bill, but no new cultivator licenses will be available in the first wave.

Dates:

Wave One Applications open:
January 7 – March 15, 2020

Wave One Licenses awarded:
July 1, 2020

Wave Two Licenses awarded:
December 2021

Fees:

Non-refundable application fee:
$5,000

Annual License fee:
$40,000

INFUSERS

Infuser licenses are the lowest cost entry into the Illinois market, and as the name suggests, license holders will be able to create cannabis-infused products and concentrates, including edibles.

Up to 40 licenses will be awarded in July 2020.

Dates:

Wave One Applications open:
January 7 – March 15, 2020

Wave One Licenses awarded:
July 1, 2020

Wave Two Licenses awarded:
December 2021

Fees:

Non-refundable application fee:
$5,000

Annual License fee:
$10,000

TRANSPORTERS

Licensed transportation companies will be the only businesses legally allowed to move cannabis between growers, infusers and dispensaries.

Up to 40 licenses will be awarded in July 2020.

Dates:

Wave One Applications open:
January 7 – March 15, 2020

Wave One Licenses awarded:
July 1, 2020

Wave Two Licenses awarded:
December 2021

Fees:

Non-refundable application fee:
$5,000

Annual License fee:
$40,000

BONUS TIPS

To elevate your Illinois cannabis license application

Pretty Lethal Designs has worked with cannabis businesses across the US with branding and license application design, so here are a few of our tips to crafting a winning application:

1.

Choose your business name wisely

The more original the better, as Federal trademark protection isn’t currently available for cannabiz. And, with other states already in business, your name originality is also important to ensure a domain name and avoid market confusion.

2.

Spruce up your resume and get a professional head shot

These will need to be included in your application and need to help show your ability to lead this business successfully.

3.

Don’t go it alone

There is going to be a lot to plan and figure out when completing your application. Don’t force yourself to figure it out all by yourself. Remember this is document is one of the most important investments you’ll make in your cannabis business. Get help from professionals who understand the industry and can provide valuable insight.

4.

Get community input from day one

Not everyone will be receptive as you’re discussing your plans with local leaders and elected officials. Be open to their feedback and look for ways to express your dedication to make the community better for more people.

No images of the cannabis leaf are permitted.

No problem.

This article is meant for general guidance purposes. Any advice given in this article should not be substituted for professional help.