Illinois has passed the most equity-based cannabis law in the country. Not only does the new Illinois Cannabis Regulation & Taxation Act allow for the expungement of criminal cannabis charges, but it also awards special benefits to social equity applicants interested in owning and operating legal cannabis businesses.
What is a Social Equity Applicant?
Social equity applicants are those who have been disproportionately affected by the war on drugs – either personally through conviction of a cannabis-related crime or systematically by living in a disproportionately affected area. Any cannabis-related business seeking licensing under the new Illinois Cannabis Regulation & Taxation Act may qualify as a social equity applicant if 51% of the ownership meets certain requirements outlined below.
Social Equity Applicant Requirements
In order to qualify as a social equity applicant under the new law, applicable businesses must meet one of the following rules:
- 51%+ ownership and control by people who have lived 5+ of last 10 years in a disproportionately affected area (poverty rate 20%, 75%+ children in free lunch program, 20% households receive SNAP, unemployment more than 120% national average, high rate of arrest, conviction, and incarceration related to the sale, possession, use, cultivation, manufacture, or transport of cannabis)
- 51%+ ownership by one or more individuals who have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under the act OR is a member of an impacted family (We both qualify)
- for applicants with 10+ full-time employees, 51% reside in disproportionately impacted area or have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under the act OR is a member of an impacted family
Social Equity Applicant Benefits
Social equity applicants receive a number of benefits under the Illinois Cannabis Regulation & Taxation Act, including:
- AUTOMATIC 50/250 POINTS IN APPLICANT GRADING SYSTEM
- eligibility for low-interest rate loans and grants through The Cannabis Business Development Fund (administered by the Department of Commerce and Economic Opportunity). The Cannabis Business Development Fund is used exclusively to benefit Social Equity Applicant Benefits (research, administration, etc. included as well) and is funded $12,000,000 as soon as practical after July 1, 2019. The Department of Commerce and Economic Opportunity has no more than 180 days after the effective date of the Act to implement loan and grant programs.
- 50% waiver for any nonrefundable license application fee, nonrefundable license fee, and surety bond or financial requirements as long as the applicant, including all individuals and entities with 10% or greater ownership and all parent companies, subsidiaries, and affiliates, has less than a total of $750,000 of income in previous calendar year AND has no more than 2 other licenses for cannabis business establishments in the State of Illinois.
- If license is transferred or sold within 5 years, all grants, loans, and waived fees must be paid back.
- Some early approval licensed businesses (medical cannabis) will participate as a host in a cannabis business establishment incubator program rather than donating money (must be approved by Department of Commerce and Economic Opportunity). Provide loan of at least $100,000 and mentorship to incubate a Social Equity Applicant licensee for at least a year. Cannot take more than 10% of any business receiving incubation services. OR, they may choose to just give a $200,000 interest-free loan for 2 years without taking any ownership.
Invest in a Social Equity Applicant
Interested in investing in an Illinois cannabis company but don’t know who to work with? We have put together a highly qualified team and plan for a craft grow in Southern Illinois, and we qualify as social equity applicants as long as we retain 51% ownership of the company. If you’d like more information about investing in this unique opportunity, contact us today!