Six things to know about Illinois’ historic marijuana legalization law

We’re annotating the Cannabis Regulation and Tax Act to dig deeper into the key questions you have about social equity measures, enforcement and more.

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While Illinois has just legalized recreational marijuana, there are still many unanswered questions about its use, sale and possession and whether the measure can fulfill its social equity objectives.

The only way to truly understand what’s about to take effect on Jan. 1 is to pore through all 182 pages of the Cannabis Regulation and Tax Act. 

Over the next year, we’ll be annotating the law itself to identify critical passages, answer some basic questions and dig deeper into the issues that concern you. Below are excerpts from the law with direct links and our notes.

Why legalize Cannabis?

(a) In the interest of allowing law enforcement to focus on violent and property crimes, generating revenue for education, substance abuse prevention and treatment, freeing public resources to invest in communities and other public purposes, and individual freedom, the General Assembly finds and declares that the use of cannabis should be legal for persons 21 years of age or older and should be taxed in a manner similar to alcohol.

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By legalizing cannabis, the state aims to free up law enforcement to focus on violent crimes and theft. Legalization will also create funding for education and substance abuse treatment. You must be at least 21 years old to purchase recreational marijuana and it will be taxed like alcohol.

Legalization was a major issue in the gubernatorial and state’s attorney’s race. In early December, Cook County State’s Attorney Kim Foxx expunged 1,012 low-level drug offenses. On New Year’s Eve, Gov. J.B. Pritzker issued more than 11,000 pardons for low-level cannabis convictions.

After signing the bill, Pritzker said the proposal “starts righting some historic wrongs” against minority communities impacted disproportionately by the war on drugs.

Social equity measures aim to right the wrongs of the war on drugs

(c) The General Assembly also finds and declares that individuals who have been arrested or incarcerated due to drug laws suffer long-lasting negative consequences, including impacts to employment, business ownership, housing, health, and long-term financial well-being.

(d) The General Assembly also finds and declares that family members, especially children, and communities of those who have been arrested or incarcerated due to drug laws, suffer from emotional, psychological, and financial harms as a result of such arrests or incarcerations.

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The war on drugs had wide-ranging implications that not only negatively affected the incarcerated, but also the families and communities of the incarcerated. These communities are classified as disproportionately impacted areas, and you can learn more about them here.

Social equity qualifications

(a) "Social Equity Applicant" means an applicant that is an Illinois resident that meets one of the following criteria

(1) an applicant with at least 51% ownership and control by one or more individuals who have resided for at least 5 of the preceding 10 years in a Disproportionately Impacted Area;

(2) an applicant with at least 51% ownership and control by one or more individuals who:

(i) have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under this Act; or

(ii) is a member of an impacted family;

(3) for applicants with a minimum of 10 full-time employees, an applicant with at least 51% of current employees who:

(i) currently reside in a Disproportionately Impacted Area; or

(ii) have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under this Act or member of an impacted family.

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Applicants for social equity measures must be majority owners or employ at least 10 full-time employees that qualify. Qualifications include living in an area that was over policed during the war on drugs. Family members of those incarcerated for a marijuana offense are also eligible, along with the individual.

Social equity applicants will receive extra points on their application. Money is set aside in a special fund to provide grants and loans for these applicants. The City Council’s Black Caucus pushed — but failed — to halt sales in Chicago for six months, saying the legislation did not go far enough to ensure equity in the emerging industry.

The law recognizes the need to diversify the industry

(a) The General Assembly finds that the medical cannabis industry, established in 2014 through the Compassionate Use of Medical Cannabis Program Act, has shown that additional efforts are needed to reduce barriers to ownership. Through that program, 55 licenses for dispensing organizations and 20 licenses for cultivation centers have been issued. Those licenses are held by only a small number of businesses, the ownership of which does not sufficiently meet the General Assembly's interest in business ownership that reflects the population of the State of Illinois and that demonstrates the need to reduce barriers to entry for individuals and communities most adversely impacted by the enforcement of cannabis-related laws.

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Since only medicinal cannabis license holders will be able to sell on day one of legalization, critics say the legislation is allowing the market to become overwhelmingly white-owned. The social equity measures aim to reduce barriers to ownership. Still, that leaves a bleak landscape for minority participation in the early months of legalization.

Social equity measures will be funded via the Cannabis Business Development Fund

There is created in the State treasury a special fund, which shall be held separate and apart from all other State moneys, to be known as the Cannabis Business Development Fund.

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The Cannabis Business Development Fund is a unique aspect of Illinois’ marijuana law establishing a fund to be exclusively used for providing low-interest loans and grants for qualified social equity applicants designed to help them start and operate a business.

Funds will also go toward advertising to attract applicants, conducting research on participation numbers and assisting with job training.

The fund will hold money collected from early approval licenses issued before January 2021 and from license transfers from qualified social equity applicants.

An additional $12 million dollars in the fund comes from the medicinal pilot program.

The funds cannot be transferred from the fund, according to the law.

There’s a price to pay for Social Equity Applicants to transfer their license

In the event a Qualified Social Equity Applicant seeks to transfer, sell, or grant a cannabis business establishment license within 5 years after it was issued to a person or entity that does not qualify as a Social Equity Applicant, the transfer agreement shall require the new license holder to pay the Cannabis Business Development Fund an amount equal to:

(1) any fees that were waived by any State agency based on the applicant's status as a Social Equity Applicant, if applicable;

(2) any outstanding amount owed by the Qualified Social Equity Applicant for a loan through the Cannabis Business Development Fund, if applicable; and

(3) the full amount of any grants that the Qualified Social Equity Applicant received from the Department of Commerce and Economic Opportunity, if applicable.

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All fees waived for qualified social equity applicants must be paid back before the license can be transferred to a new license holder. That money would go towards the Cannabis Business Development Fund. A dispensary license costs about $30,000.

Got a question about the new law? Let us know what topics you’d like to explore by emailing JMcGhee@chicagoreporter.com or in the comments section below.