The Illinois Department of Agriculture (“IDOA”) released the Application
for Adult Use Cannabis Craft Grower License
(“Application”), along with its Emergency
Administrative Rules ( 8 IAC 1300
) (“Administrative Rules”) related to Craft Grower, Infuser, and
Transporter licenses. This article will provide Craft Grower Applicants with pertinent
information related to the Application and Administrative Rules. Infuser and
Transporter applications will be discussed in detail in an article to follow.
Craft Grower
License and Application Summary
- Submittals
: Beginning February 14, 2020, and no later than March 16, 2020,
Redacted and Unredacted version required.
-
Awarded
: On or before July 1, 2020
-
Availability
: (40) Craft Grower Licenses on or before July 1, 2020. By
December 21, 2021, the IDOA shall issue up to (60) additional Craft Grower
licenses
-
Fees
:
Non-refundable $5,000 Application fee. If an Applicant is awarded a
license, the fee for a Craft Grower License is $40,000. Qualified social
equity applicants will pay 50% of those fees
-
Limits
: Any person or entity awarded a license
pursuant to the initial application period
can only hold one craft grower license. Any person or entity awarded a license during
this second application period cannot hold more than two craft grower licenses
Craft
Grower Application and Exhibit Specifics
Applicants for a Craft Grower License will be ranked using the
following 1000-point scale:
- Exhibit A - Suitability of the Proposed Facility (75
points)
- Exhibit B - Suitability of Employee Training Plan (50 points)
- Exhibit C - Security Plan and Recordkeeping (145 points)
- Exhibit D - Cultivation Plan (75 points)
- Exhibit E - Product Safety and Labeling Plan (95 points)
- Exhibit F - Business Plan and Services to be Offered (110
points)
- Exhibit G - Status as a Social Equity Applicant (200
points)
- Exhibit H - Labor and Employment Practices (20 points)
- Exhibit I - Environmental Plan (20 points)
- Exhibit J - Illinois Owner (90 points)
- Exhibit K - Status as a Veteran (20 points)
- Exhibit L - Diversity Plan (100 points)
- Exhibit M - Bonus Section (2 points)
- In
the event of tie, the IDOA may award up to 2 bonus points for any of the three
initiatives: (1) community benefits plan, (2) substance abuse prevention plan,
(3) local community/neighborhood report
Only the top-scoring Applicants that receive at
least 75% of available points
, will be issued Craft Grower
Licenses
by the Department. In order words, if you cannot receive at
least 750 points, do not bother applying. Further, if you are not a Social
Equity Applicant (200 points) and do not have Veteran status (20 points), you
are at a major disadvantage seeing that, at best, your perfect score would only
be 780 points – a harsh starting point in any competitive application market.
While Exhibits A through M above are similar to those
found within the Application for Cannabis Dispensary Licenses, the following
additional Exhibits are notably different and therefore discussed in further
detail below.
Exhibit N
:
Property Ownership
– 8 IAC
1300.300(c)(28) Applicant must submit different documentation depending on
Applicant’s status as the property owner.
- If the property is owned by the Applicant
,
Applicant must submit: confirmation of land ownership, identification of any
and all mortgagees and or perfected lienholders, and if applicable,
verification of notification to any and all mortgagees and/or perfected
lienholders that the property is to be used as a craft grow facility at least
through December 31, 2021; and consent thereto by any mortgagees and/or perfected
lienholders;
- If the property of the proposed location is leased
by the Applicant
, Applicant must submit: a copy of the lease,
confirmation of land ownership, identification of any mortgagees and/or
lienholders, a written statement from property owner and/or landlord certifying
consent for a craft grow facility to be operated on the premises by the
applicant at least through December 31, 2021, and if applicable, verification
of notification by the property owner to any and all mortgagees and/or perfected
lienholders that the property is to be used as a craft grow facility at least
through December 31, 2021, and consent thereto by any mortgagees and/or
perfected lienholders.
- If the property is not owned or currently leased
by the Applicant
, Applicant must submit: a written statement from
property owner and/or landlord certifying consent for the applicant to lease or
purchase the land for the purpose of operating a craft grow facility at least
through December 31, 2021, and if applicable, the additional verification as
noted above as if the property were leased.
While property location and/or identification was not
required for Dispensary Licenses, this is certainly not the case for Craft
Grower Licenses. Bottom line, a Craft Grower License shall be issued for the
specific
location identified
on the Application
, and is
valid
only for the owner, name designated on the license and the location for which
it is issued
.
Exhibit O
:
Notice of Proper Zoning
- this
Exhibit contains two parts: one to be completed by the Applicant, and one to be
completed by the local zoning authority. Both parts must be completed. According
to the Administrative Rule Section 1300.350, Craft Growers shall:
- Not be located within 1,500 feet to another craft
grower
or a cultivation center (410
ILCS 705/30-30(o)); and
- Not be in violation of any other local zoning
requirements
.
Therefore, at the time of Application submittal, the
Applicant must include a copy of the current local zoning ordinance or permit
and verification that the proposed craft grower is in compliance with the local
zoning rules and distance limitations established by the local jurisdiction. Identifying
existing properties with proper zoning will be a crucial step for any Application.
Exhibit P
:
Organizational Information and Financial Interest Disclosure
– 8 IAC 1300.305 requires that an Applicant disclose
all relevant financial information related to the craft grower. In responding
to this Exhibit, Applicants are encouraged to review the definition of
“financial interest” in the rules, and Sections 1300.305 and
1300.300(c)(22)-(27). The Application further requires the following:
- Copies of compensation agreements,
management agreements, supply agreements, or other financial documents between
or among the Applicant and any persons having a financial interest and/or
control in the licensee
,
including growers, owners, and officers, or a narrative if the agreement is
oral.
- Documentation establishing that
Applicant has at least $20,000 in liquid assets
.
- Nature and type of any outstanding
bonds, loans, lines of credit,
etc., issued or executed, or to be issued or executed, in
connection with the opening or operating
of the proposed craft
grower.
- Disclosure of all sources of
funding used to acquire or develop the craft grower business and documentation
of such funding
.
Exhibit P is rather thorough and will most likely
require a CPA attesting to the liquid asset requirement or possibly other
financial documents. Additionally, if the Applicant is an entity, the entity
will have to provide documentation that it has $20,000 in liquidate assets, likely
requiring a bank account in the entity’s name which may be a challenge
establishing an account at any FDIC insured bank. Moreover, Exhibit F (Business Plan) must
show detailed sources and amounts of funds needed for short- and long-term
operations. Again, these are not requirements which were included for
Dispensary Licenses; however, they have been deemed requirements for Craft
Grower Licenses, thereby creating additional challenges for all Applicants.
Conclusion
Of course, there are several miscellaneous items within
the Application and Administrative Rules which are still unknowns at this
point. Such as, confusing definitions in
the Administrative Rules:
- “Craft
Grower” - …licensed by the Department to cultivate, dry, cure, and package
cannabis and perform other necessary activities
to make cannabis available
for sale at a dispensing organization or use at an infuser…. may share premises with an infuser
or a dispensing organization, or both....
- "Cultivation
Center" - … cultivate,
process, transport (unless otherwise limited by this Act), and perform other
necessary activities.....
- “Early
Approval Adult Use Cultivation Center License” - cultivating, infusing,
packaging, transporting
(unless otherwise provided in the Act)....
Additional
confusion pertains to scoring requirements and whether Craft Grower Licenses
allow for infusing and/or processing of cannabis. If so, why does the Craft Grower
Applications not require an infusion plan?
As with Dispensary Licenses issued by the IDFPR, the IDOA
is
encouraging Applicants to submit written questions regarding the
application, application materials, or application process. Shapiro &
Associates Law has already submitted several questions to the IDOA and
encourages you to contact us directly if we can be of assistance in navigating the
many intricate parts of the Craft Grower License or any other cannabis
organization license application process.
Justin Silva
is an attorney at Shapiro & Associates Law. Please contact him at jsilva@shapiroassociateslaw.com
or (312) 763-9640.
