Illinois pot dispensary licensees wish to sell the ownership shares.

Caught in a Catch-22, recreational marijuana dispensary license holders are asking Illinois to change its policy and allow them to sell ownership shares to raise money to start their business.

Some 200 recreational license owners have signed a Chicago NORML petition seeking permission to sell equity in their companies.

But under the guidance of the Illinois Department of Financial and Professional Regulation, license holders are prohibited from selling their initial “conditional” licenses until they are approved to begin retailing.

“Which is ridiculous, because the conditional stage requires you to raise the most capital,” said Eddie Moore, co-founder of Chicago NORML and a conditional license holder. “There’s no reason not to do it. It’s not allowed in the law and it harms people.”

State law legalizing marijuana, effective in 2020, was intended to promote greater minority participation an industry that reported only one African AmericanFour Hispanic, and 12 Asians with ownership interests as of 2021, compared to 209 white owners.

This summer, the state issued 182 conditional dispensary licenses, all social equity applicants, generally defined as those with previous minor cannabis convictions or areas or high poverty or cannabis arrests. was.

Conditional license holders may not open for business until they pass a background check, obtain local site approval, pass an inspection, and pay the license fee.

The clear objective of the policy against selling conditional licenses was to prevent minorities and social equity license holders from selling them even before the commencement of operations. But the owners say that prevents them from using ownership shares in their biggest asset, the license, and they should have the same rights as business owners in other industries.

The law does not explicitly say anything prohibiting the sale of conditional licenses.

But Christopher Slabby, a spokesman for the agency that controls the dispensary, issued the following statement: “While reviewing (state legalization law) in its entirety, (the law) does not authorize any changes to the conditional license, including its ownership.” The sale of a conditional license, as a conditional license is not a distribution organization.”

Sparky Rose, co-founder and managing partner of Supercritical Cannabis Consultants in Chicago, said state policy is hurting people who are likely to have $5 million licenses but don’t have the money to start their own business. Huh.

“Why are they doing this?” He asked. “This is crazy and crazy. We need to stop doing everything in our power to thwart social equality applicants.”

Representative La Sean Ford, a Chicago Democrat who led legislation to increase the number of licenses, said he believes state regulators have the power to change that policy.

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If they don’t, he said, lawmakers could change the law in the fall session. The General Assembly may also consider changes such as expanding the maximum size for new craft cannabis producers and providing a business tax deduction, which is not allowed under federal law because of the federal ban on cannabis.

“We have to follow the lead of the business community,” Ford said. “This is what they say they need to succeed. If we can help them by changing the law, we should.”

The licensees have also complained that the state will not allow them to enter into management service agreements so that they can run another entity with more resources.

In response to requests from license holders, the Department of Financial and Business Regulation on Wednesday changed its policy To allow management services under certain conditions.

A contracted manager may handle daily tasks, hiring subcontractors or other managerial functions, the agency ruled, but ownership and decision-making must remain with the conditional license holder.

Any such arrangement is subject to approval by regulators. It can only be enforced during the conditional license period, and must expire after the store has received its final license to open for business. License holders again stated that the policy bars them from using their equity to start their business, and only protects existing large cannabis companies.

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