What it Will Take to Land a Coveted Medical Marijuana Business License in Illinois

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Let the countdown begin.

Entrepreneurs in Illinois can officially apply for medical marijuana business licenses in less than four weeks, with the state planning to accept submissions from Sept. 8-22.

So what will it take to win one of the coveted 21 cultivation licenses and 60 dispensary permits?

Illinois recently published proposed guidelines detailing how officials intend to rank applicants, offering a peek into the selection process.

Like some other new MMJ markets – such as Massachusetts – Illinois plans to use a point system. Officials will score everything from business plans and financial disclosures to the applicant’s security strategy. Those with the most overall points in each designated region of the state will be first in line to receive licenses, assuming they meet all the basic requirements as well.

Entrepreneurs would do well to study up on the guidelines now, as some are quite detailed.

Dispensary applicants, for example, must submit a “suitability of proposed dispensary” outline that includes color photographs of the location where they want to build their business, a copy of the local zoning ordinance and “a narrative statement describing specific elements in your plan that will favor the immediate community and why your operations will negate any detrimental impact.”

“It’s like, are you planning a raid, ‘Mission Impossible’-style?” said Chris Lindsey, a legislative analyst for the Marijuana Policy Project (MPP), pointing out that the dispensary application requires notations of all trees and shrubs outside the building.

Breaking it Down

Under the proposed scoring system, dispensary applicants can earn up to 900 core points as follows:

  • 200 points for business and operations plans
  • 200 points for a security plan
  • 200 points for recordkeeping and inventory plans
  • 150 points for financial disclosures
  • 150 points for suitability of proposed dispensary plan

They can also receive up to 100 “bonus” points for submitting plans outlining how they will create community benefits, minimize their impact on the environment, lower their carbon footprint or prevent substance abuse, among other areas.

The ranking system for cultivation center applicants is similar. They can earn up to 1,000 core points as follows:

  • 300 points for a cultivation plan
  • 200 points for a security plan
  • 150 points for a suitability of proposed facility plan
  • 150 points for a product safety and labeling plan
  • 100 points for a staffing and operations plan
  • 100 points for business plan

Cultivation center applicants can also win up to an additional 100 points for some of the same plans outlined in the bonus section of the dispensary ranking system.

The guidelines include extensive details of what all these plans should include.

The dispensary business and operations plan, for example, should feature detailed information on each executive as well as job descriptions, hiring procedures, an outline of best practices for daily management of the facility and copies of proposed advertising materials, among many other requirements.

The cultivation plan required for those who want to produce cannabis should include a description of the strains they will grow, process flow diagrams, procedures for dealing with waste and a list of pesticides to be used.

“It quantifies what they’re looking for, and it hopefully will make the system fair and take the [politics] out of it,” said Roger Strong, operations manager at Area 51 Growers, a Missouri-based company that’s hoping to snag a cultivation center permit for southern Illinois. “It’s my hope that that’s going to be what they actually rely on in giving the licensure and not on who you know.”

Strict Regulations

The scoring system is based on a comprehensive regulatory framework that requires licensed business to meet a host of ongoing requirements.

It’s all part of the state’s plan to create one of the strictest medical cannabis programs in the nation.

“I would say that they want to treat marijuana like plutonium,” Lindsey of MPP said.

Details of the application process and the overall regulations on marijuana businesses are not yet final. Illinois will hold three town hall meetings across the state in the coming days to accept feedback on the proposals.

But observers expect few, if any, revisions.

“They’re not going to change anymore,” Lindsey said. “(The state) has basically signed off on them.”

One of the biggest obstacles for many entrepreneurs may just be getting through the application process. Would-be medical marijuana growers must pay a non-refundable $25,000 application fee. They also must have proof of at least $500,000 in liquid assets.

Dispensary planners are hit slightly less hard, with a $5,000 application fee and a required $400,000 in liquid assets. But the latest draft regulations also require a $2 million surety bond, which sets a very high financial bar.

“This is not a mom-and-pop situation,” Lindsey said. “That ($2 million) is not to go build your building. That’s in case you get penalized, and the state wants to take it out of your bank account.”

Dispensaries are also encouraged to use bullet-proof glass in limited-access areas of their buildings, which Michael Mayes of the Chicago-based cannabis consultancy Quantum 9 finds incredibly restrictive.

“That could add 10-20% to (dispensaries’) actual cost projections,” Mayes said.

Serious Players Only

One of the main effects of all these financial hurdles and red tape is that the state will wind up culling not-so-serious business people from the herd.

“We don’t want the Colombians and the Mexican cartels running a medical marijuana business in the state of Illinois. What we want is people from Illinois taking care of people from Illinois,” Strong said. “The state of California had so many issues when they first started up because they said, ‘Let’s approve marijuana.’ They didn’t put any guidelines out there.

“I was a gun dealer for several years. You want to talk about regulations and having people crawl up your butt, get a gun license. This is nothing compared to that,” Strong said.

But there are still plenty of problems, Strong said. One giant loophole is that the state hasn’t specified how the 21 licensed cultivation centers are supposed to legally get marijuana seeds to start growing – which is a common issue in most new MMJ states.

“They can’t legally tell us, ‘It’s okay to bring clones and seeds in from across state lines.’ So it’s going to be basically a wild, wild west to get the seeds and clones into the state,” Strong said.

There are also potential issues with zoning, certification of cultivation center buildings, and the looming question of whether so few growers and dispensaries will be able to meet the MMJ demand in Illinois.

All of that doesn’t even take into account how hard it will be for prospective patients to get certified by the state as legal MMJ recipients, said Mayes. For example, the law that created the MMJ pilot program requires potential patients to be fingerprinted and pay an annual $100 license fee, along with getting a prescription from a doctor they’ve been seeing for at least a year.

“It’s almost unconstitutional to make a patient do that,” Mayes said.

John Schroyer can be reached at Johns@mjbizmedia.com