Illinois Grants First Adult-Use Cannabis Licenses

In 2019, recreational cannabis sales were fast-tracked in Illinois after the state passed its legalization bill. Soon after, the Department of Financial and Professional Regulation issued five adult-use cannabis licenses. Notably, all five went to pre-existing medical marijuana dispensaries around the state.

Cities to Decide on Cannabis Sales

The five dispensaries awarded licenses were spread across Illinois — in Naperville, Mundelein, Joliet, Effingham, and Canton. As a result, these storefronts had state approval to sell cannabis to anyone over 21, starting January 1, 2020.

However, only two of the five cities, Canton and Joliet, had approved recreational cannabis businesses. Meanwhile, Naperville, Effingham, and Mundelein had yet to decide whether to allow adult-use dispensaries. It seemed some municipalities were more comfortable with medical shops and wary of an influx of consumers.

That weekend, some Naperville residents joined a protest urging the city council to ban cannabis retailers. City officials planned to discuss the topic further the next week. Even though a license had already been issued, the city retained the right to overrule it, according to city spokeswoman Kate Schultz.

Green Thumb Industries

Four of the five licensed shops were owned by Chicago-based Green Thumb Industries, which also held a 50% stake in the fifth, The Clinic Effingham. Moreover, GTI had been in ongoing talks with local communities to find a solution that worked for everyone.

GTI spokeswoman Linda Marsicano explained, “GTI is thrilled that our five stores received the state of Illinois’ first approvals. GTI has had a great relationship with the city of Naperville since 2015 … We continue to talk and work with the city on this important issue.”

Local Cannabis Sales Tax

These five dispensaries were among 55 statewide that had applied for adult-use licenses. Not only were they eligible at their current storefronts, but they could also apply for a second retailer license. The state reviewed applications on a first-come, first-served basis. In fact, Chris Slaby, a spokesman for the Department of Financial and Professional Regulation, readily admitted that more licenses would follow soon.

Each municipality had to act to ban recreational retailers, or those retailers would be approved automatically by the state. The town of Effingham, for instance, was still undecided, but officials planned open discussion the following month, according to city administrator Steve Miller. “We anticipated Effingham might be granted a license, so with that we’ll have to get public input and then the (city) council can make an informed decision,” he noted.

Most Illinois cities were excited about the opportunity, as well as the additional tax income. Local jurisdictions could impose their own tax on dispensaries, capped at 3% on top of regular sales taxes and the state excise tax. Canton Mayor Kent McDowell expressed his enthusiasm, saying, “It’s nice we get a little piece of the pie down here south of I-80.” He added, “We have to fight for existence all the time.”

Dispensaries Can’t Move

Unfortunately, the legislation had one shortcoming that needed clarification. The Illinois Department of Financial and Professional Regulation issued its interpretation of the bill regarding a business changing location. Under that reading, if a medical dispensary moved, it would no longer qualify for an adult-use license. As a result, this posed a serious problem for medical shops forced to relocate when their local jurisdiction banned cannabis sales.

The legislators themselves disagreed with this interpretation and asked the Governor to overrule the confusion. Before acting, however, the Governor wanted to assess how many shops would be affected. He stated, “My office is more than willing to discuss potential solutions with you when we have a better understanding of the scope of the problem.”