Delays, Uncertainty Leave Illinois Medical Marijuana Entrepreneurs in the Lurch

marijuana uncertainty

By John Schroyer

Illinois’ budding medical marijuana industry has been reeling since former Gov. Pat Quinn’s last-minute and highly controversial decision to leave office without signing off on business licenses for cultivation and dispensary applicants.

Quinn decided to leave the matter in the hands of his successor, Gov. Bruce Rauner, who said during the 2014 campaign that he would have vetoed the bill legalizing medical cannabis in Illinois if he had been in office at the time.

The new governor’s outspoken criticism of not just the state’s MMJ licensing process but even cannabis itself has many of the hundreds of license applicants worried about what will happen next. Some even fear the entire four-year pilot program itself is in jeopardy.

The uncertainty is hitting many entrepreneurs square in the pocket books, as they must now put their business plans on hold.

“Everyone’s sort of sitting in a state of limbo,” said pharmacist Joseph Friedman, whose company PDI Medical is waiting to hear on three dispensary applications it filed last year.

Many companies vying for one of Illinois’ 60 dispensary licenses or 21 cultivation licenses have already spent tens of thousands of dollars on application fees, consultants and lawyers. Others have rented out space or begun building out businesses.

Investors providing startup funds for these companies are becoming impatient, and some are moving on.

MJBizCon“I have been informed by various individuals that certain of their investors have pulled out because of the delays, or are contemplating pulling out because of the delays,” said Chicago attorney Brian Rosenblatt, who has been working closely with several business license applicants.

Potential Scenarios

The only consensus in Illinois is that there is no consensus on what will happen next.

There are several ways this could play out. Rauner could:

  • “Do a very slow walk-through with these licenses” or hit the reset button and start the whole process over,  said state Rep. Lou Lang, D-Skokie, one of the prime sponsors of the bill that established the MMJ program. That could delay the program by weeks or many months.
  • Take no action at all and simply refuse to sign off on any business licenses, therefore potentially holding up implementation indefinitely.
  • Scrap the scoring system for business licenses used by Quinn’s administration and then develop his own criteria for ranking applicants. That would “lead to a lot of lawsuits and messiness,” Lang said, adding that this is an “equally bad” scenario to taking no action at all, as it would leave the industry in a state of long-term uncertainty.
  • Conduct a quick review of the process and then move forward relatively quickly with awarding licenses.

It’s difficult to determine which path the state will take, as Rauner’s comments are hard to decipher.

After news leaked over the weekend that Quinn had a shortlist for the business licenses before he left office, a Rauner spokesman said that the governor’s office “will conduct a thorough legal review of the process used by the Quinn administration and refer our findings to the Attorney General’s office. No licenses will be granted until this process is thoroughly reviewed.”

This seem to indicate that the licensing process could take a while.

In a separate statement issued last week, though, Rauner’s office stated the the governor “is committed to a quick and thorough review of the program, in the hopes of bringing clarity to the many concerned families across the state.”

Some insiders say there’s reason to be hopeful that the governor will sign off on business licenses sooner rather than later, in part because he retained the statewide project coordinator of the MMJ pilot program under Quinn.

“Nobody knows as much about this program as he does,” Lang said, referring to the coordinator.

Long Runway

Regardless, the first dispensaries likely won’t open until summer at the earliest. Even if business licenses were issued this week, dispensaries would have to wait for cultivation operations to set up shop and harvest their first crop.

“It would be May or June or July before product (is) available. So that would leave two and a half years out of a four-year pilot program,” Lang said.

This could dampen interest by the business community and change the dynamics of the industry.

“How much money will entrepreneurs want to sink into a program for two and a half years without a guarantee that it’ll be continued after that?” Lang said. “And secondly, if they do sink that money in, if there’s only two and a half years left in the program, it’ll drive up prices for patients.”

Consequently, Lang said, he’ll be introducing legislation to extend the life of the program and basically restart the four-year clock to begin when the business licenses are finally issued. Rauner’s office declined to comment on news of the bill.

Applicants Taking Action?

Last Friday, around 35 to 40 applicants and some of their attorneys met in Chicago to discuss the initial stages of forming the Cannabis Association of Illinois, in part to help get Rauner’s office focused on the issue.

“We’re willing to do whatever it takes to work with Gov. Rauner and his staff,” said Rosenblatt, who attended the meeting. “We’re really addressing this from the perspective of, how we can help ensure that those patients who are in need of medical marijuana can get it?”

Attorney Eric Berlin, who put in thousands of dollars worth of pro bono legal work to help get the program passed in 2013, said he also knows that “folks are frustrated and mulling lawsuits” over the business licenses.

But, he warned, lawsuits could delay things even further.

“I can understand the frustration and the desire to push things forward, given expenditures, leases possibly lapsing, and general business uncertainty with the pilot program ending in less than three years. I suspect that (Sunday’s) leak of scoring sheets might inflame the situation,” Berlin said.

Berlin said he knows of many business applicants who have already invested between $100,000 and $1 million in their MMJ business models, and are “freaking out” because of the tenuous situation with Rauner’s office.

He also said there’s an “underwhelming” number of patients that have been approved so far to get legal MMJ registrations: 650 as of mid-January.

Still, according to Melaney Arnold, a spokesperson for the MMJ program, about 13,000 potential patients have started the application process, and 1,800 have submitted “at least part if not all of the application.”

And the program isn’t even up and running yet, Lang pointed out. Once it becomes a reality, he thinks the patient base will expand rapidly.

“Once the licenses are given out, I think it’ll start a whole new round of patient applications,” Lang said.

John Schroyer can be reached at [email protected]

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 3 Comments

  1. cockasauras January 27, 2015
  2. winston January 27, 2015
  3. hellmudd bones January 27, 2015

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