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HB1438: ARTICLE 40. TRANSPORTING ORGANIZATIONS (Illinois Cannabis Regulation & Tax Act)

ARTICLE 40. TRANSPORTING ORGANIZATIONS

Section 40-1. Definition.

In this Article, “Department” means the Department of Agriculture.

Section 40-5. Issuance of licenses.

(a) The Department shall issue transporting licenses through a process provided for in this Article no later than July 1, 2020.

(b) The Department shall make the application for transporting organization licenses available on January 7, 2020 and shall receive such applications no later than March 15, 2020. Thereafter, the Department of Agriculture shall make available such applications on every January 7 thereafter or if that date falls on a weekend or holiday, the business day immediately succeeding the weekend or holiday and shall receive such applications no later than March 15 or the succeeding business day thereafter.

Section 40-10. Application.

(a) When applying for a transporting organization license, the applicant shall electronically submit the following in such form as the Department of Agriculture may direct:

  • (1) the nonrefundable application fee of $5,000 or, after January 1, 2021, another amount as set by rule by the Department of Agriculture, to be deposited into the Cannabis Regulation Fund;
  • (2) the legal name of the transporting organization;
  • (3) the proposed physical address of the transporting organization, if one is proposed;
  • (4) the name, address, social security number, and date of birth of each principal officer and board member of the transporting organization; each principal officer and board member shall be at least 21 years of age;
  • (5) the details of any administrative or judicial proceeding in which any of the principal officers or board members of the transporting organization (i) pled guilty, were convicted, fined, or had a registration or license suspended or revoked, or (ii) managed or served on the board of a business or non-profit organization that pled guilty, was convicted, fined, or had a registration or license suspended or revoked;
  • (6) proposed operating bylaws that include procedures for the oversight of the transporting organization, including the development and implementation of an accurate recordkeeping plan, staffing plan, and security plan approved by the Department of State Police that are in accordance with the rules issued by the Department of Agriculture under this Act; a physical inventory shall be performed of all cannabis on a weekly basis by the transporting organization;
  • (7) verification from the Department of State Police that all background checks of the prospective principal officers, board members, and agents of the transporting organization have been conducted;
  • (8) a copy of the current local zoning ordinance or permit and verification that the proposed transporting organization is in compliance with the local zoning rules and distance limitations established by the local jurisdiction, if the transporting organization has a business address;
  • (9) proposed employment practices, in which the applicant must demonstrate a plan of action to inform, hire, and educate minorities, women, veterans, and persons with disabilities, engage in fair labor practices, and provide worker protections;
  • (10) whether an applicant can demonstrate experience in or business practices that promote economic empowerment in Disproportionately Impacted Areas;
  • (11) the number and type of equipment the transporting organization will use to transport cannabis and cannabis-infused products;
  • (12) loading, transporting, and unloading plans;
  • (13) a description of the applicant’s experience in the distribution or security business;
  • (14) the identity of every person having a financial or voting interest of 5% or more in the transporting organization with respect to which the license is sought, whether a trust, corporation, partnership, limited liability company, or sole proprietorship, including the name and address of each person; and
  • (15) any other information required by rule.

(b) Applicants must submit all required information, including the information required in Section 40-35 to the Department. Failure by an applicant to submit all required information may result in the application being disqualified.

(c) If the Department receives an application with missing information, the Department of Agriculture may issue a deficiency notice to the applicant. The applicant shall have 10 calendar days from the date of the deficiency notice to resubmit the incomplete information. Applications that are still incomplete after this opportunity to cure will not be scored and will be disqualified.

Section 40-15. Issuing licenses.

(a) The Department of Agriculture shall by rule develop a system to score transporter applications to administratively rank applications based on the clarity, organization, and quality of the applicant’s responses to required information. Applicants shall be awarded points based on the following categories:

  • (1) Suitability of employee training plan;
  • (2) Security and recordkeeping plan;
  • (3) Business plan;
  • (4) The applicant’s status as a Social Equity Applicant, which shall constitute no less than 20% of total available points;
  • (5) Labor and employment practices, which shall constitute no less than 2% of total available points;
  • (6) Environmental plan that demonstrates an environmental plan of action to minimize the carbon footprint, environmental impact, and resource needs for the transporter, which may include, without limitation, recycling cannabis product packaging;
  • (7) the applicant is 51% or more owned and controlled by an individual or individuals who have been an Illinois resident for the past 5 years as proved by tax records;
  • (8) The applicant is 51% or more controlled and owned by an individual or individuals who meet the qualifications of a veteran as defined by Section 45-57 of the Illinois Procurement Code;
  • (9) a diversity plan that includes a narrative of not more than 2,500 words that establishes a goal of diversity in ownership, management, employment, and contracting to ensure that diverse participants and groups are afforded equality of opportunity; and
  • (10) Any other criteria the Department of Agriculture may set by rule for points.

(b) The Department may also award up to 2 bonus points for the applicant’s plan to engage with the community. The applicant may demonstrate a desire to engage with its community by participating in one or more of, but not limited to, the following actions: (i) establishment of an incubator program designed to increase participation in the cannabis industry by persons who would qualify as Social Equity Applicants; (ii) providing financial assistance to substance abuse treatment centers; (iii) educating children and teens about the potential harms of cannabis use; or (iv) other measures demonstrating a commitment to the applicant’s community. Bonus points will only be awarded if the Department receives applications that receive an equal score for a particular region.

(c) Applicants for transportation organization licenses that score at least 85% of available points according to the system developed by rule and meet all other requirements for a transporter license shall be issued a license by the Department of Agriculture within 60 days of receiving the application. Applicants that were registered as medical cannabis cultivation centers prior to January 1, 2020 and who meet all other requirements for a transporter license shall be issued a license by the Department of Agriculture within 60 days of receiving the application.

(d) Should the applicant be awarded a transportation organization license, the information and plans that an applicant provided in its application, including any plans submitted for the acquiring of bonus points, shall be a mandatory condition of the permit. Any variation from or failure to perform such plans may result in discipline, including the revocation or nonrenewal of a license.

(e) Should the applicant be awarded a transporting organization license, the applicant shall pay a prorated fee of $10,000 prior to receiving the license, to be deposited into the Cannabis Regulation Fund. The Department of Agriculture may by rule adjust the fee in this Section after January 1, 2021.

Section 40-20. Denial of application.

An application for a transportation organization license shall be denied if any of the following conditions are met:

  • (1) the applicant failed to submit the materials required by this Article;
  • (2) the applicant would not be in compliance with local zoning rules or permit requirements;
  • (3) one or more of the prospective principal officers or board members causes a violation of Section 40-25;
  • (4) one or more of the principal officers or board members is under 21 years of age;
  • (5) the person has submitted an application for a license under this Act that contains false information; or
  • (6) the licensee, principal officer, board member, or person having a financial or voting interest of 5% or greater in the licensee is delinquent in filing any required tax returns or paying any amounts owed to the State of Illinois.

Section 40-25. Transporting organization requirements; prohibitions.

(a) The operating documents of a transporting organization shall include procedures for the oversight of the transporter, an inventory monitoring system including a physical inventory recorded weekly, accurate recordkeeping, and a staffing plan.

(b) A transporting organization may not transport cannabis or cannabis-infused products to any person other than a cultivation center, a craft grower, an infuser organization, a dispensing organization, a testing facility, or as otherwise authorized by rule.

(c) All cannabis transported by a transporting organization must be entered into a data collection system and placed into a cannabis container for transport.

(d) Transporters are subject to random inspections by the Department of Agriculture, the Department of Public Health, and the Department of State Police.

(e) A transporting organization agent shall notify local law enforcement, the Department of State Police, and the Department of Agriculture within 24 hours of the discovery of any loss or theft. Notification shall be made by phone, in person, or by written or electronic communication.

(f) No person under the age of 21 years shall be in a commercial vehicle or trailer transporting cannabis goods.

(g) No person or individual who is not a transporting organization agent shall be in a vehicle while transporting cannabis goods.

(h) Transporters may not use commercial motor vehicles with a weight rating of over 10,001 pounds.

(i) It is unlawful for any person to offer or deliver money, or anything else of value, directly or indirectly, to any of the following persons to obtain preferential placement within the dispensing organization, including, without limitation, on shelves and in display cases where purchasers can view products, or on the dispensing organization’s website:

  • (1) a person having a transporting organization license, or any officer, associate, member, representative, or agent of the licensee;
  • (2) a person having an Early Applicant Adult Use Dispensing Organization License, an Adult Use Dispensing Organization License, or a medical cannabis dispensing organization license issued under the Compassionate Use of Medical Cannabis Pilot Program Act;
  • (3) a person connected with or in any way representing, or a member of the family of, a person holding an Early Applicant Adult Use Dispensing Organization License, an Adult Use Dispensing Organization License, or a medical cannabis dispensing organization license issued under the Compassionate Use of Medical Cannabis Pilot Program Act; or
  • (4) a stockholder, officer, manager, agent, or representative of a corporation engaged in the retail sale of cannabis, an Early Applicant Adult Use Dispensing Organization License, an Adult Use Dispensing Organization License, or a medical cannabis dispensing organization license issued under the Compassionate Use of Medical Cannabis Pilot Program Act.

(j) A transportation organization agent must keep his or her identification card visible at all times when on the property of a cannabis business establishment and during the transportation of cannabis when acting under his or her duties as a transportation organization agent. During these times, the transporter organization agent must also provide the identification card upon request of any law enforcement officer engaged in his or her official duties.

(k) A copy of the transporting organization’s registration and a manifest for the delivery shall be present in any vehicle transporting cannabis.

(l) Cannabis shall be transported so it is not visible or recognizable from outside the vehicle.

(m) A vehicle transporting cannabis must not bear any markings to indicate the vehicle contains cannabis or bear the name or logo of the cannabis business establishment.

(n) Cannabis must be transported in an enclosed, locked storage compartment that is secured or affixed to the vehicle.

(o) The Department of Agriculture may, by rule, impose any other requirements or prohibitions on the transportation of cannabis.

Section 40-30. Transporting agent identification card.

(a) The Department of Agriculture shall:

  • (1) establish by rule the information required in an initial application or renewal application for an agent identification card submitted under this Act and the nonrefundable fee to accompany the initial application or renewal application;
  • (2) verify the information contained in an initial application or renewal application for an agent identification card submitted under this Act and approve or deny an application within 30 days of receiving a completed initial application or renewal application and all supporting documentation required by rule;
  • (3) issue an agent identification card to a qualifying agent within 15 business days of approving the initial application or renewal application;
  • (4) enter the license number of the transporting organization where the agent works; and
  • (5) allow for an electronic initial application and renewal application process, and provide a confirmation by electronic or other methods that an application has been submitted. The Department of Agriculture may by rule require prospective agents to file their applications by electronic means and provide notices to the agents by electronic means.

(b) An agent must keep his or her identification card visible at all times when on the property of a cannabis business establishment, including the cannabis business establishment for which he or she is an agent.

(c) The agent identification cards shall contain the following:

  • (1) the name of the cardholder;
  • (2) the date of issuance and expiration date of the identification card;
  • (3) a random 10-digit alphanumeric identification number containing at least 4 numbers and at least 4 letters that is unique to the holder;
  • (4) a photograph of the cardholder; and
  • (5) the legal name of the transporter organization employing the agent.

(d) An agent identification card shall be immediately returned to the transporter organization of the agent upon termination of his or her employment.

(e) Any agent identification card lost by a transporting agent shall be reported to the Department of State Police and the Department of Agriculture immediately upon discovery of the loss.

(f) An application for an agent identification card shall be denied if the applicant is delinquent in filing any required tax returns or paying any amounts owed to the State of Illinois.

Section 40-35. Transporting organization background checks.

(a) Through the Department of State Police, the Department of Agriculture shall conduct a background check of the prospective principal officers, board members, and agents of a transporter applying for a license or identification card under this Act. The Department of State Police shall charge a fee set by rule for conducting the criminal history record check, which shall be deposited into the State Police Services Fund and shall not exceed the actual cost of the record check. In order to carry out this provision, each transporter organization’s prospective principal officer, board member, or agent shall submit a full set of fingerprints to the Department of State Police for the purpose of obtaining a State and federal criminal records check. These fingerprints shall be checked against the fingerprint records now and hereafter, to the extent allowed by law, filed in the Department of State Police and Federal Bureau of Investigation criminal history records databases. The Department of State Police shall furnish, following positive identification, all conviction information to the Department of Agriculture.

(b) When applying for the initial license or identification card, the background checks for all prospective principal officers, board members, and agents shall be completed before submitting the application to the Department of Agriculture.

Section 40-40. Renewal of transporting organization licenses and agent identification cards.

(a) Licenses and identification cards issued under this Act shall be renewed annually. A transporting organization shall receive written or electronic notice 90 days before the expiration of its current license that the license will expire. The Department of Agriculture shall grant a renewal within 45 days of submission of a renewal application if:

  • (1) the transporting organization submits a renewal application and the required nonrefundable renewal fee of $10,000, or after January 1, 2021, another amount set by rule by the Department of Agriculture, to be deposited into the Cannabis Regulation Fund;
  • (2) the Department of Agriculture has not suspended or revoked the license of the transporting organization for violating this Act or rules adopted under this Act;
  • (3) the transporting organization has continued to operate in accordance with all plans submitted as part of its application and approved by the Department of Agriculture or any amendments thereto that have been approved by the Department of Agriculture; and
  • (4) the transporter has submitted an agent, employee, contracting, and subcontracting diversity report as required by the Department.

(b) If a transporting organization fails to renew its license before expiration, it shall cease operations until its license is renewed.

(c) If a transporting organization agent fails to renew his or her identification card before its expiration, he or she shall cease to work as an agent of the transporter organization until his or her identification card is renewed.

(d) Any transporting organization that continues to operate, or any transporting organization agent who continues to work as an agent, after the applicable license or identification card has expired without renewal is subject to the penalties provided under Section 45-5.

(e) The Department shall not renew a license or an agent identification card if the applicant is delinquent in filing any required tax returns or paying any amounts owed to the State of Illinois.