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StaffAugust 2, 2022
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4min170

This story was reprinted from Crain Chicago with permission and written by John Pletz.

Amid worries that inflation elsewhere is taking a bite out of weed, Lollapalooza proves a reliable performer.

Lollapalooza delivered another summer pick-me-up to marijuana shops downtown.

PharmaCann and Cresco Labs (OTC: CURLF) report record sales at their River North stores during the four-day music festival that ended Sunday. David Chiovetti, chief commercial officer of PharmaCann, which operates a store near Clark and Superior streets, said sales were up “double digits over last year. More people came in, and people spent more.”

The cannabis industry is wrestling with slumping weed prices and worries that inflation might cause customers to spend less or trade down to less-expensive products.

Cresco Labs said overall sales at its Sunnyside retail store at 436 N. Clark Street were up from a year ago, and it posted record volume. “The cost per product was down a little from last year’s prices, but we made up for it with more transactions and more products per transaction, making it a winning festival weekend,” a spokesman said.

At Dispensary 33, which operates a store in the West Loop at 1152 W. Randolph and another on the North Side, a spokeswoman said, “we had good increase in new customers. It was a solid weekend at both stores.”

Lolla has proven to be a reliable performer for marijuana shops. The boost is even more welcome this year. Cannabis stocks have been in a slump, with many down 50% or more for the year, compared to a 14% decline for the S&P 500 Index.

Research firm Cowen recently cut its forecast for U.S. growth by about half, expecting sales to climb 6% this year. The steepest declines are in older, less-regulated markets, such as California and Colorado, where prices have been declining amid rising supplies.

Illinois and Michigan, which are newer markets, are still growing. “Though price deflation has been a feature in these markets, the positive growth reflects the benefits of better foot traffic and volume purchases, which has offset the revenue growth headwind from negative price/mix,” Cowen analysts said in a research note.

Illinois, which has relatively few stores and hasn’t yet seen many new growers begin harvesting product, has the highest wholesale pot prices in the nation, according to research firm Cannabis Benchmarks. Marijuana sells for about $3,400 per pound in Illinois. That’s down from about $4,100 in October, but it’s still triple the national average of $1,047 per pound.

Overall, Illinois’ cannabis sales have slipped 2% in each of the past two months and have been hovering near $4.2 million per day. The state is hoping for a pickup as newly licensed stores begin to open, but a noticeable impact might not come until next year.


StaffJuly 22, 2022
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7min270

Editors Note: This is republished with permission from Crain Chicago and written by John Pletz.

GRI Holdings wins zoning approval as Illinois gets ready to begin issuing long-awaited licenses this week.

GRI Holdings, one of the most controversial winners of new retail marijuana licenses in Illinois, is on its way to opening a downtown store.

The company, whose owners include restaurant owner Phil Stefani and former Chicago police commander Tom Wheeler, won approval Friday from the Zoning Board of Appeals to open a pot shop in the former Carson’s Ribs restaurant at 612 N. Wells St.

It’s the latest step in a long, strange journey that began more than two years ago, when the state of Illinois began accepting applications for new retail licenses, and has included lawsuits, lotteries, and, in GRI’s case, even a pandemic payroll protection loan.

The Illinois Department of Financial & Professional Regulation is expected to issue the first round of 185 new licenses to GRI and other lottery winners, starting with 119 licenses in the Chicago area. Because of litigation and other delays, the new retail licenses are more than two years behind schedule. With just 110 dispensaries statewide, the lack of stores has held back the growth of the industry in Illinois and hurt sales of existing cannabis companies, such as Cresco Labs, Green Thumb Industries (OTC: GTIBF) and Verano Holdings, which also sell marijuana to other retailers. Marijuana sales in Illinois have fallen over the past two months.

GRI hopes to open its first store, on Wells Street, this fall, Wheeler says. It would be one of the first new license holders to set up shop. Others who’ve received zoning approval include Mint Ventures, which will open at 201-15 N. Clinton St., and Green & Foster, which plans a store at 2114 S. Wabash Ave. Other new entrants, such as Blounts & Moore, have filed for zoning approvals.

GRI’s store will be the fourth in River North, joining Ascend, Cresco Labs, PharmaCann.

“After all that waiting, we’re really excited for it to come to fruition,” says Wheeler, noting that he worked in the neighborhood as a police officer.

The company told the city it expects to spend about $2 million turning the 6,400-square-foot former restaurant into a marijuana outlet, which will be called Green Rose Dispensary.

GRI was one of 21 applicants that received perfect marks in the initial scoring, setting off a round of complaints and scrutiny about a licensing process that was designed to favor “social-equity” applicants as a way to diversify ownership of the cannabis industry.

To achieve social-equity status, applicant groups had to be led by people who lived in neighborhoods disproportionately impacted by poverty, violence and enforcement of marijuana laws as part of the war on drugs—or those who had arrests or convictions for marijuana possession or their family members also could qualify.

A third way to achieve social-equity status involved companies employing at least 10 workers who met the requirements for residency or criminal records. The hiring approach proved controversial in minority communities, where it was quickly derided as the “slave-master” clause.

Although the hiring method was used by GRI, Wheeler defends the company’s social-equity qualifications. “I come from a disproportionately impacted area in Roseland,” says Wheeler, who also is a partner in a cannabis-consulting firm. “I still live here.”

The law required these companies to make the hires before they got the license and to keep them employed. The state had intended to issue licenses by May 2020, but COVID and other problems delayed lotteries for more than a year.

Marijuana is federally illegal, which prevents cannabis companies from getting traditional loans or banking services. Wheeler says when Hinsdale-based GRI applied for a PPP loan from the Small Business Administration, “we weren’t a cannabis company at that time. We had no license at that time.” Federal records show the $44,037 loan made in May 2020 was forgiven by the SBA.

 


StaffMay 6, 2019
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5min40

This past Saturday, Illinois Governor J.B. Pritzker released the plan for full cannabis legalization which is set to begin on January 1, 2020. Companies that currently had medical cannabis licenses would get a jump on other companies with regards to applying for licenses.

According to the plan, new licenses for dispensaries would begin on May 1 and processors, craft growers and transporters would begin licensing on July 1. It wouldn’t be until late 2021, that the next round of businesses would receive licenses.

The proposed law for adult-use cannabis would legalize possession of up to 30 grams for residents over the age of 21. Non-residents are only approved for about half that amount.  Municipalities could ban retail stores within their boundaries within the first year of the program.

Expungement is a key part of the new legislation as those with misdemeanor or Class 4 felony cannabis convictions would see their records wiped clean. It is expected that at least 800,000 people will benefit from this move.  In addition to that, a $20 million low-interest loan program will be established to encourage diversity in cannabis business ownership.

"DCEO will administer a low-interest loan program to qualified “social equity applicants” to help
defray the start-up costs associated with entering the licensed cannabis industry."

Under the proposed rules, no new large-scale commercial growers would be permitted at this time. The focus would be on small “craft” growers, with an emphasis on creating diversity. Residents will be allowed to grow up to five plants as long as the plants are out of public view.

“We have to ensure it’s not a small group of people getting very rich,” said Rep. Kelly Cassidy, D-Chicago, one of the measure’s sponsors. “We want to make a lot of new business leaders in the state through this process.”

The fees are as follows:

Cultivation organizations:
• Non-refundable permit fee: $100,000
• Cannabis business development fund fee: 5% of total sales between July 1, 2018
to July 1, 2019 or $500,000, whichever is less.
§ Dispensing organizations:
• License 1
o Non-refundable permit fee: $30,000
o Cannabis business development fund fee: 3% of total sales between July
1, 2018 to July 1, 2019 or $100,000, whichever is less.
• License 2
o Non-refundable permit fee: 30,000
o Cannabis business development fund fee: $200,000
 Licensing costs for new entrants to the market
§ Craft growers
• Non-refundable application fee $5,000
• License fee $40,000
§ Processors
• Non-refundable application fee $5,000
• License fee $40,000
§ Transporting organizations
• Non-refundable application fee $5,000
• License fee $10,000
§ Dispensing organizations
• Non-refundable application fee $5,000
• License fee $30,000

The taxes are as follows:

Cannabis purchaser excise tax:
o 10% of the purchase price – Cannabis with a THC level at or below 35%
o 20% of the purchase price – All cannabis infused products
o 25% of the purchase price – Cannabis with a THC level above 35%
o These taxes shall be in addition to all other occupation, privilege, or excise taxes impose by the
State of Illinois or by any municipal corporation or political subdivision.
• Municipal purchaser excise tax:
o Municipalities may enact a purchaser excise tax up to 3% in increments of 0.25%
o Counties may enact a purchaser excise tax up to 0.5% in incorporated areas in increments of
0.25%
o Unincorporated areas may adopt a purchaser excise tax up to 3.5% in increments of 0.25%

Revenue would go toward paying for program costs and, after that, would fund the Restoring Our Communities grant program, substance abuse services, law enforcement grants, and the general state fund.

Green Market Summit

The Green Market Report is hosting its first Chicago Green Market Summit on May 7. Located in downtown Chicago, the event is focused on the emerging market in Illinois and features many local businesses.


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