Illinois hits regulatory snags in lead-up to legal cannabis sales

Molly Parker of The Southern Illinoisan (TNS)
This Monday, May 20, 2019, photo shows a marijuana leaf on a plant at a cannabis grow at Loving Kindness Farms in Gardena, Calif. (AP Photo/Richard Vogel)

In just more than four months, it will be legal in Illinois for adults 21 and older to purchase and possess cannabis. But a number of state and local actions are required before the legal toking-up commences on Jan. 1.

The industry is hoping to avoid two major pitfalls in the law's rollout: extremely long lines and wait times and running out of pot in the early days, disappointing would-be customers, said Pam Althoff, executive director of the Cannabis Business Association of Illinois.

"The industry has taken that to heart. There's a great deal riding on our ability to answer those concerns," she said.

Althoff said Gov. JB Pritzker's administration has been cooperative in working through some of the law's complex stand-up requirements. And cultivation sites — the designated places where marijuana can be legally grown — have doubled and tripled in size in anticipation of the demand surge expected early next year, she said.

But several issues and questions remain. One has to do with the licensing of dispensary operators to sell adult recreational products.

The law allows current medical cannabis dispensary operators to seek a license to sell recreational marijuana, so long as they continue to provide products for medical use. The idea in allowing the medical marijuana dispensaries the ability to also sell recreational marijuana was to ensure the state has at least a minimum number of facilities open and operating on Jan. 1.

But some medical dispensaries may need to change locations. That could mean moving down the block where parking is better, or to another city entirely, if the one where the operator is presently located decides to prohibit recreational sales.

The law allows municipalities the ability to opt out, as well as implement zoning requirements, much like with liquor stores. Yet the state's regulatory agency recently informed medical dispensary operators that if they move locations, they forgo their ability to receive a license for adult use recreational sales.

This narrow interpretation of the law runs counter to lawmakers' intent, according to a letter from two of the bill's sponsors sent to Pritzker late last week. It also represents an about-face by the Illinois Department of Financial and Professional Regulation, which issues the licenses.

After passage of the bill, the regulatory agency notified current medical dispensaries they would be permitted to relocate and maintain the ability to seek an adult use license, according to the letter from Sen. Heather Steans and Rep. Kelly Cassidy.

The agency continued to provide this guidance through July, the lawmakers said, and several municipalities began working with dispensaries to identify more appropriate locations for serving an expanded clientele. However, in early August, "the agency abruptly advised the industry it was withdrawing its prior guidance," and that adult use licenses would only be provided to medical dispensaries that remain at their current physical address — even if they weren't planning on moving far.

This issue in particular, Althoff said, is "why the industry is starting to have some palpitations, because we're worried about meeting our deadline."

Rosie Naumovski, the owner of Thrive Anna and Thrive Harrisburg, said she's also dealing with a regulatory barrier that restricts her ability to expand into certain locations. In addition to allowing medical marijuana dispensaries to serve as dual-use sites, they also have first dibs on obtaining licenses for a second site. But the operators can only open new locations within the boundaries defined in the law.

Due to a technicality, the locations where Naumovski can move are more restrictive than it is for others. For instance, the dispensary operator in Marion could choose to open a second site throughout much of Southern Illinois, including in Anna, but Naumovski doesn't have the ability to open one in Marion or Carbondale. She's hoping lawmakers address some of these barriers and allow for more market competition to serve both medical patients and adult-use purchasers.

Naumovski said the run-up to Jan. 1 is an exciting time, but also presenting some unanticipated challenges. She believes that demand will be high right away, and is hoping the state is able to address these concerns before the New Year. "It's going to explode," she said.