This story was reprinted with permission from Crain’s Chicago Business.
The state of Illinois added 55 more licenses to sell marijuana, adding to a pool of 192 licenses awarded last year.
The new licenses could expand the industry in Illinois, which has suffered from a lack of retail outlets where customers can buy cannabis products.
But they’re being awarded at a time when new entrants are struggling in Illinois and elsewhere to raise the estimated $500,000 to more than $1 million required to set up a pot shop. So far a little more than two dozen of the 192 licensees have opened stores.
“Everyone is skeptical where the money is going to come from,” says Brad Spirrison, CEO of GrownIn, a company that’s partnering with 1871 on an incubator for cannabis startups, many of whom won licenses in the previous round. “It’s unclear if half the originals are going to get up and running.”
Like the original group, the new round of licensees are social-equity applicants who must meet criteria that demonstrate come from neighborhoods disproportionately impacted by the war on drugs or were arrested or convicted for low-level marijuana crimes.
But because the licenses were awarded by lottery, applicants didn’t have to submit the same type of detailed, often expensive applications as the initial round of license seekers, the pool of competitors was much larger.
The application fee also was reduced to $250 from $2,500. The result was an applicant pool nearly three times larger than the first round.
There were 2,675 applicants overall. But the vast majority — 2,290 of the applicants — were seeking 36 licenses in the Chicago metro area, which has the largest concentration of new licenses.
A more accessible lottery means more accessible opportunities to benefit the entire State of Illinois, Mario Treto, Jr., secretary of the Illinois Department of Financial & Professional Regulation, said in a statement.