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How to Open a Marijuana Dispensary in Illinois

Illinois enacted the Cannabis Regulations and Tax Act permitting possession and commercial sale of cannabis to adults who are 21 or older. This act not only expunges the cannabis related criminal records of nearly 800,000 citizens, it also opens several opportunities for business owners who are looking to get into the dispensary business. However, it’s crucial to know the laws and regulations of this act and the specific ordinances prior to starting a marijuana business.

It’s important to note that the requirements opening and regulating medical marijuana dispensaries are different and not covered by this act. You should refer to the Compassionate Use of Medical Cannabis Program Act for more information about medical marijuana business in the state.

The table below gives a brief introduction to the relevant laws and regulations you need to be aware of before opening a dispensary.

Relevant Laws

The Cannabis Regulation and Tax Act (410 ILCS 705/1-999) legalizes and regulates the recreational use and commercial sale of marijuana.

License Fees

The licensing costs for starting a new dispensary are:

  • $5000 application fee (non-refundable)
  • $60,000 licensing fee for a two-year license

 

Who can I Sell Cannabis To?

You can sell cannabis to anyone who is 21 and above.

Is There a Limit on the Amount of Cannabis I can Sell?

In one day, dispensaries can sell specific amounts of cannabis to adults 21 or older who are residents of Illinois:

  • 500 Milligrams of THC in a marijuana filled product (edibles)
  • Up to 5 grams of Marijuana
  • 30 grams of Marijuana flower

Non-Illinois residents can only purchase up to half of what Illinois residents can consume.

Types of Licenses

The law recognizes five types of licenses:

  • Cultivation centers
  • Craft growers
  • Processors
  • Transporting organizations
  • Dispensing organizations

Criminal History

All new dispensary owners are required to give their fingerprints for a background check. It is crucial that you disclose your entire criminal history.

Taxation

Section 410 ILCS 705/65 taxes consumers at the following rates:

  • If a consumer purchases marijuana with a THC level at or below 35% they will be charged 10% of the purchase price.
  • For anything with a THC level of 35% and above, they will be taxed at a rate of 25% of the purchase price.
  • All products that are infused with marijuana are subject to 20% of the sale price.
  • It is important to know the tax requirements of the specific ordinance as local governments are permitted to enact laws that impose taxes up to 3% consumer excise tax.

Additional Resources

The Adult Use Cannabis Program page on the Illinois Department of Financial and Professional Regulation website provides information on the general administrative rules for opening and running a dispensary business.

Note: State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.

Who Oversees the Licensing Process?

The Illinois Department of Financial and Professional Regulation (IDFPR) is the organization that oversees dispensary licensing.

Application Process

The act, section 15-10 gives priority to medical marijuana dispensaries to register to sell cannabis through an Early Approval Adult Use Dispensing Organization License. This license allows existing medical marijuana dispensaries to sell recreational marijuana by January 1, 2020. There are some required documents that applicants who own a medical marijuana dispensary need to show to get this license. These include paying $30,000 in licensing fees and showing proof of registration for the medical marijuana dispensary.

The law states that the department will start accepting applications for new dispensary licenses before October 1, 2019. These new businesses looking to run a dispensary need to undergo background checks by submitting their fingerprints to the FBI. They must also disclose relevant financial history like previous bankruptcy records, student loans, and disclose their tax returns. If you fulfill these requirements, the IDFPR will issue you a conditional Adult Use Dispensing Organization License.

I Got My Conditional Adult Use Dispensing Organization License. What's Next?

The next step after getting your conditional license is to secure a premise where you can run your dispensary. You have 180 days from the approval date to identify a location to run your cannabis business. The department will inspect your premise and will issue you a license if your dispensary is in compliance with state and local laws.

How Does the IDFPR Determine Who Qualifies for a License?

The IDFPR uses a scoring process to determine who qualifies for a license. IDFPR will award you up to 250 points if you provide a satisfactory application containing mandatory elements, including:

  • Your recordkeeping and security plans (awarded 65 points); This includes a plan showing how you intend to prevent theft or diversion of marijuana
  • Your general business and operating plans (awarded 65 points); This should show how you plan to manage your dispensary and should ideally include best practices from other dispensaries
  • Your knowledge and expertise in the dispensary business (30 points); and
  • A diversity plan (5 points).

Make Sure to Research the Local Laws of Your Ordinance Before Opening a Cannabis Business

Even though section 55-25 of the act states that local ordinances may not unreasonably regulate marijuana business establishments, the law still gives them the authority to enact rules governing the place, manner and time and number dispensaries. So, its crucial to research the laws before acquiring property in a specific ordinance.

I Don’t Have the Finances to go Into the Marijuana Business, Are There any Funds Available to Help me?

The act gives incentives to business owners who are minorities and those who are willing to open their dispensaries in areas where poverty remains prevalent. Accordingly, the act has established a “social equity applicant” status. This program is aimed at promoting equity in the cannabis industry. According to section 7-20 of the act, you might be eligible to have 50% of the non-refundable application fee and other nonrefundable fees waived if you meet at least one of the criteria outlined in the definition section of the act.

Can I Advertise My Dispensary Anywhere?

You cannot advertise your marijuana business in the following premises:

  • Public transits;
  • Within 1,000 feet of hospitals, recreational centers, schools, or public libraries; and
  • Property owned by the public.

The list of all the advertisement regulations can be found under Section 55-20 of the act.

Are There Any Packaging Rules Associated With Running a Dispensary?

If you are in the cannabis industry, you need to make sure you package the cannabis in a sealed container and label it. The packaging must also be child and light resistant and follow the current rules and regulations. Section 55-21 of the act lists the complete packaging requirements that business owners should comply with.

Useful Resources

Consult an Attorney to Assist With the Process

Navigating the laws of the dispensary business is a complicated process specially since marijuana is still illegal at the federal level. This will affect marijuana business including business structures, and taxation. In addition, the licensing requirements are strict and costly in Illinois. You may want to speak with a Chicago cannabis law lawyer to assist you with the application process and the state’s licensing requirements.

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