Tag Archives: Illinois state legislature

State, Insiders Stand to Benefit From Illinois’ Medical Marijuana Law

Hilary Gowins Become a fan

Writer/editor, Illinois Policy Institute

Posted: 06/20/2014 5:52 pm EDT

 

 

Illinois became the 20th state in the U.S. to legalize medical marijuana in July 2013. But the Illinois law, which allows for a four-year medical marijuana pilot program, could be the next big windfall for cronyism in the state.

Political favoritism may already be cropping up in Illinois’ newly established medical marijuana industry, and barriers to entry could be steep as the state may impose hefty application and permit fees.

Competition to become established in Illinois’ medical marijuana business is stiff. Under the pilot program created by the new state law, Illinois will allow only 60 marijuana dispensaries and 22 growing centers.

This industry is expected to mean big money for those who land much-coveted business rights — last year, California’s medical marijuana sales were $1 billion. And in Illinois, a state notorious for corrupt insider dealings, the politically connected often get first dibs.

Those wanting a shot at one of the precious few dispensary and growing center slots are already jockeying for position. Anyone wanting to open one of these businesses must submit the name of the business, proposed location, relevant agricultural experience and much more information.

One person seeking medical marijuana registration from the state is Sam Borek, a former college roommate of Lou Lang, the state representative who sponsored Illinois’ medical marijuana law. According to CBS St. Louis, Borek has reserved at least three-dozen marijuana-related business names.

A friend of the governor is trying to get in on the action as well.

Chicagoan David Rosen, who was Gov. Pat Quinn’s chief fundraiser in 2010, plans to open a medical marijuana business in Nevada called "Waveseer" — and interestingly enough, he has also registered the same business name in Illinois.

Ultimately, the state will have the sole authority to decide the businesses it feels are best suited to operate under the new state law, and that will leave open the possibility for lawmakers to grant special favors to those applicants who are politically connected.

And any applicants who do receive registration through the state will have to comply with numerous regulations.

Under proposed regulations for the pilot program, the state would require dispensaries to pay a $5,000 nonrefundable application fee, a $30,000 permit fee and a $25,000 in annual permit renewal fee. Anyone wanting a dispensary permit will also have to show proof of $50,000 in escrow or bonds.

The application fee for growing centers is even steeper, at $25,000. Growing centers also have to pay a $200,000 fee after its permit is approved, plus a $100,000 renewal fee. Applicants would also have to prove that they have $2 million in escrow or bonds.

And if owners want to make changes to their business, there could be a fee for that, too.

Under the proposed regulations, the state could charge growing centers $1,000 to change their business name, to alter stock ownership or change principal officers.

These hefty fees certainly limit the number of people who can afford to open a business in a booming industry.

Given the level of state involvement in Illinois’ medical marijuana industry, it’s not hard to imagine opportunities for corruption. So as marijuana-related business licenses begin to roll out of Springfield, Illinoisans would be wise to pay attention to who’s reaping the benefits.

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Illinois’ Proposed Medical Marijuana Rules Could Squeeze Out Small Businesses

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Medical marijuana regulations recently proposed in Illinois could be a major buzzkill for the state’s entrepreneurs and other small business owners.

Under the proposal from the Illinois Department of Agriculture, legal pot businesses would need approximately half a million dollars in startup costs. The program would require pot dispensaries to pay a $5,000 nonrefundable application fee, show proof of $400,000 in assets, pay a $30,000 permit fee and fork over a $25,000 yearly permit renewal fee.

Cultivation centers would be required to pony up a $25,000 nonrefundable application fee, prove they have $250,000 in liquid assets, pay a $200,000 fee once the permit is approved and pay a $100,000 renewal fee.

Additionally, local governments would be able to charge their own dispensary and cultivation center fees.

"Probably 50 percent of the wannabes are now out," Joseph Friedman, a suburban Chicago pharmacist hoping to opening a dispensary, told the Chicago Tribune. "This is going to bring out just the serious players who are well-capitalized and well-credentialed."

Regulators have been slowly hammering out the various rules for potential users, growers and dispensary vendors since the state’s medical weed law — the strictest in the nation — went into effect earlier this year. Medical marijuana advocates worry the new proposals for dispensaries and cultivation centers could price out suffering patients and ultimately threaten the success of the nascent pilot program.

"This program was designed, proposed and passed to help sick people," Dan Linn, the executive director of the Illinois chapter of the National Organization to Reform Marijuana Laws (NORML), told The Huffington Post. "But now it seems the state has wrapped itself up in the bureaucracy and this is all going to be on the backs of sick people."

Linn said the some of the high regulation fees will help keep the pilot program cost-neutral for the state and also weed out "the perceived trouble makers" hoping to get rich quick in the medical marijuana gold rush.

The downside, Linn said, is what he calls the "trickle-down" cost to medical marijuana patients. "A lot them are sick and on disability and can’t afford the [high price of] legal medical marijuana. You’ll see patients who sign up for a card and never use it."

Linn notes that if the fees are passed on to customers and medical weed becomes significantly more expensive than that on the street, dispensaries and clinics won’t have enough business. "Ultimately," he said, "that could make or break this program."

Real estate is shaping up to be another challenge for potential medical marijuana businesses, with local governments in the Chicagoland area tinkering with zoning laws that could restrict pot businesses’ already limited options.

Other proposed regulations would require medical marijuana patients to be fingerprinted, undergo a background check and pay $150 yearly fee for a special photo ID card, the Associated Press reports.

Regulators will take public input on the proposals until Feb. 27.

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