Chart: Illinois lottery for retail marijuana licenses raises social equity questions

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While Illinois’ plan for increasing social equity in its cannabis industry was heralded as a potential blueprint for other new markets, the execution of the program has already come into question.

When the state announced finalists last week for the next 75 retail licenses, only 21 total applicants made the cut.

The final licenses will be issued via a lottery later this month. Each applicant will receive one lottery entry per paid application per region, resulting in more than 300 total entries across the state.

What set Illinois’ social equity approach apart from efforts in other states is that instead of setting aside a number of applications to be awarded to disadvantaged individuals, the state incentivized diversity through its application process.

In other words, prospective license holders would garner additional points if they qualified as social equity applicants.

For example, businesses that were majority-owned by minorities – of which there were 13 in the list of finalists – automatically received 50 points on their application, or 20% of the total possible points (including bonus points).

By contrast, “knowledge and experience” accounted for 12% of the total possible points.

In the end, the 21 applicants who made the final cut for the lottery all qualified as social equity applicants.

Illinois’ social equity provisions for cannabis companies are considered among the most forward-thinking in the country, yet some advocates and business insiders say the rules don’t go far enough to promote minority participation in the industry.

And the concentration of finalists representing fewer than two dozen companies amplifies some of the concerns raised about the program.

“That doesn’t sound to me like social equity. … That sounds like big business,” Michael Malcolm, a real estate broker from Morgan Park, told the Chicago Sun-Times.

Ultimately, each company could receive licenses for up to 10 locations via the lottery.

The announcement came after months of delays caused by the COVID-19 pandemic. Finalists for the retail licenses were expected in May, with announcements for additional growers and processors to follow.

No timeline has been released for when the selection process for nonretail licenses will move forward.

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