How to Open a Marijuana Dispensary in Illinois

The state of Illinois enacted the Cannabis Regulation and Tax Act in 2019. It permits the possession and commercial sale of cannabis products for recreational use. The Act expunges the cannabis-related criminal records of nearly 800,000 citizens. It also opens several opportunities for business owners and entrepreneurs who are looking to get into the dispensary business. Since only 55 new licenses were available in 2023, it's important to know the laws and specific zoning ordinances of this Act before making a marijuana business plan.

The requirements for opening and regulating medical marijuana dispensaries are in the Act. You should refer to the Compassionate Use of Medical Cannabis Program Act for more information about medical cannabis dispensary requirements in the state.

The table below gives a brief introduction to the relevant laws and regulations you need to know to open a cannabis retail dispensary.

Note: State laws are always subject to change through the passage of new legislation. Please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.

Who Oversees the Licensing Process?

The Illinois Department of Financial and Professional Regulation (IDFPR) is the organization that oversees dispensary licensing. The IDFPR assigned 17 Bureau of Labor Statistics (BLS) regions. Only a certain number of dispensaries can be within each region.

Application Process

The Act, section 15-10, gave initial priority to medical marijuana dispensaries to register to sell cannabis through an Early Approval Adult Use Dispensing Organization License. This license allowed existing medical marijuana dispensaries to sell recreational marijuana by January 1, 2020. There are some required documents that applicants who own a medical marijuana dispensary need to show to get this license. These include paying $30,000 in licensing fees and showing proof of registration for the medical marijuana dispensary.

Initially, the law stated that the department would start accepting applications for new dispensary licenses before October 1, 2019. As of March 2023, there were so many applications that a social equity lottery program was set up. The Social Equity Lottery under 68 IAC 1291.400 sets aside 55 application spaces for individuals who:

1. Lived in poverty for five out of the last ten years
2. Had a low-level cannabis-related arrest or conviction for themselves or a family member, or
3. Survived a shooting

New businesses looking to run a dispensary need to undergo background checks by submitting their fingerprints to the FBI. They must also disclose relevant financial history like:

• Previous bankruptcy records
• Student loans
• Tax returns

If you fulfill these requirements, the IDFPR will issue you a conditional Adult Use Dispensing Organization License.

I Got My Conditional Adult Use Dispensing Organization License. What's Next?

The next step after getting your conditional license is to secure a premise where you can run your dispensary. You have 180 days from the approval date to identify a location to run your cannabis business. Your location cannot be within 1500 feet of another dispensary unless you are a Social Equity lottery winner. There is a one-time extension should you have good cause. The department will inspect your premise. The department issues you a license if your dispensary is in compliance with state and local laws which includes location and floor plans. An updated FAQ for Conditional Licenses from the IDFPR can be found on their website.

How Does the IDFPR Determine Who Qualifies for a License?

The IDFPR uses a scoring process to determine who qualifies for a license. The IDFPR will award you up to 1000 points if you provide a satisfactory application containing mandatory elements, including:

• Your security plans (awarded 200 points). This includes a plan showing how you intend to prevent theft or diversion of marijuana
• Your recordkeeping and inventory plan (awarded 200 points)
• Your suitability of the proposed dispensary (awarded 150 points)
• Your general business and operating plans (awarded 200 points). This should show how you plan to manage your dispensary and should ideally include best practices from other dispensaries
• Your financial disclosures (awarded 150 points)
• Your bonus points (awarded up to 100 points)

The IDFPR awards bonus points up to 100 points as follows:

• Local community or neighborhood report (awarded 10 points)
• Labor and employment practices (awarded 15 points)
• Research plan (awarded 10 points)
• Community benefits plan (awarded 10 points)
• Environmental plan (awarded 10 points)
• Substance abuse prevention plan (awarded 15 points)
• Verification of ownership by a minority, female, disabled person, or veteran (awarded 15 points)
• Illinois resident (awarded 15 points)

Those qualifying under the Social Equity program must produce additional documentation. Criteria can be found on the IDPFR website.

Make Sure to Research the Local Laws of Your Ordinance Before Opening a Cannabis Business

Section 55-25 of the Act states that local ordinances may not unreasonably regulate marijuana business establishments. Yet the law still gives local authorities like towns, cities, and counties, the authority to enact rules governing the dispensary's location. It's crucial to research the laws before acquiring property in a specific ordinance.

Are There Any Funds Available To Help Me Get Into The Marijuana Business?

The Act gave incentives to business owners who are minorities and those who are willing to open their dispensaries in areas where poverty remains prevalent. Accordingly, the Act established a “social equity applicant" status. This program aims at promoting equity in the cannabis industry. According to section 7-20 of the Act, you might be eligible to have 50% of the non-refundable application fee and other nonrefundable fees waived if you meet at least one of the criteria outlined in the definition section of the Act.

Can I Advertise My Dispensary Anywhere?

You cannot advertise your marijuana business in the following locations:

• Public transits (including waiting areas like bus and train stops)
• Within 1,000 feet of hospitals, recreational centers, schools, or public libraries
• Property owned by the public (libraries, parks)

The list of all the advertisement regulations can be found under Section 55-20 of the act.

Are There Any Packaging Rules Associated With Running a Dispensary?

If you are in the cannabis industry, you need to make sure you package the cannabis in a sealed container and label it. The packaging must also be child and light resistant and follow the current rules and regulations. Section 55-21 of the act lists the complete packaging requirements with which business owners should comply.

Useful Resources

• Setting Up a Marijuana Business: The Basics
• Marijuana Business: Licenses, Permits, and Planning
• Details on State Marijuana Laws
• Illinois Business Laws

Consult an Attorney to Assist With the Process

Navigating the laws of the dispensary business is a complicated process, especially since marijuana is still illegal at the federal level. This will affect marijuana businesses, including business structures and taxation. In addition, licensing requirements are strict and costly in Illinois. You may want to speak with a Chicago cannabis law lawyer to assist you with the application process and the state's licensing requirements.