How to Open a Dispensary in Illinois

How to Open a Dispensary in Illinois


Are you looking to start a cannabis retail business in Illinois? Learn How to Open a Cannabis Dispensary in Illinois! With the recent legalization of consumption lounges and additional dispensary licenses, there’s never been a better time to get started. But before diving in headfirst, it’s essential to understand the application process and costs involved. In this step-by-step guide, we’ll cover everything you need to know about opening a dispensary in Illinois.

The Cannabis Retail License Application Process in Illinois

Learning how to Open a Cannabis Dispensary in Illinois is essential. Entrepreneurs must go through the state’s strict licensing process. This involves submitting a completed application form and paying a nonrefundable fee of $5,000 or $2,500 for social equity applicants. Successful applicants will then be issued with a Conditional Adult Use Dispensing Organization License which gives them 180 days to secure a suitable location within their designated geographical region before they can begin retail operations.

Overall costs associated with opening and operating an Illinois dispensary include real estate renovation and construction, business equipment and infrastructure, security systems along with monthly lease payments, payroll expenses for staff and managers as well as marketing expenditures.

Illinois Dispensary Chicago application

As of 2022, Illinois has 110 dispensaries for cannabis operating in the state. Another 185 dispensaries are being set up all over Illinois and up to 500 in total will exist one day.  Chicago dispensaries will comprise over 60% of the cannabis dispensaries in Illinois.

Social equity applicants comprised all of the dispensary licenses issued by the application process regulated by the IDFPR. Marijuana in Illinois is legal for medical and recreational use for people 21 years of age and older.  No new dispensaries are yet open but should be coming in late 2022.  Currently, 312 dispensaries in the West Loop or anywhere in Illinois only a medical marijuana dispensary is selling cannabis to both medical and adult use with their dispensing organization licenses.

Illinois Dispensary License Application 2023

Illinois issued 185 conditional cannabis dispensaries in the summer of 2022, with applications made available from October 2019.

Another round of 50 licenses is coming for 2022 or 2023, which will bring the number of Adult Use Dispensary Organizations (AUDO) to 345, leaving 155 more dispensary licenses before the cap of 500 is hit under the Illinois Cannabis Regulation and Tax Act.

With the revenue generated by cannabis dispensaries in the billions of dollars and rising, these developments present a very lucrative opportunity.

However, opening and running a dispensary is a challenging business venture.

  • Opening a dispensary requires a lot of considerations, compliance with numerous regulations and a significant amount of capital.
  • costs to open your doors in Illinois could run from $500,000 upwards of millions depending on real estate costs
  • Many cannabis dispensaries are selling millions of dollars of product a month
  • competition for new dispensaries licenses is fierce.

illinois dispensary application

Illinois has application periods that are only open for a short time. The state has changed the Illinois dispensary application substantially from 2020 to how it is in 2023. Contact our office to see if you qualify for the social equity lottery.

  • Product/Service Description – This entails how you plan to run the dispensary and the unique aspects about it. Try to be as specific as possible. Include details of the strains of flower you will dispense and where you will source them.
  • Market Research – This section includes the methods you used to identify your target customers and how this data will affect your marketing, operations and pricing. Always use concrete numbers (ideally verified by a third party) rather than estimates.
  • Competitors – Includes details on other businesses that you will compete with, either directly or indirectly. What are their strengths and weakness, and how do you plan to differentiate your business.
  • Leadership Team – This section includes a summary of your qualifications and those of your management team. You may include business development experience in other sectors, leadership skills or customer service.
  • Financials – This section can be quite daunting. It involves formulating a clear and concise budget. You should include a long-term (say 5 years) financial forecast that includes operational expenses, net profit and projected annual revenue.

A revenue forecast is conducted by estimating how much product you think you will sell production costs, retail price and complementary costs (payroll, rent, transport, etc.). You may also include a break-even analysis, with an estimated timeline until profitability.

  • Illinois-specific Requirements – You may include details of covering your security systems, secure product transport, product tracking, waste plans and other state requirements. Note that these may be included in your application.
  • Investor Proposal – Involves how you will value your shares if you present your plan to investors. Consult with a CPA to ensure you are compliant with state and federal regulations.

Obtaining a retail cannabis license in Illinois, or any other state can be incredibly difficult and costly. The Illinois Department of Financial and Professional Regulation (DFPR) is tasked with cannabis licensing in Illinois. There are strict requirements for prospective dispensary owners.

Applicants have to undergo a background check, release full tax returns for past years and disclose any past bankruptcy or defaults on student loans, alimony or child support. You must submit a conditional adult-use dispensing organization license application along with a non-refundable $5,000 application fee.

How much does it cost to open a dispensary in Illinois.

It can cost more than you think to open a dispensary because of the high security compliance costs. Once you receive a conditional license, there is a $30,000 permit fee for the first 12 months. Because of the high compliance requirements, it may cost over $1.5 million dollars to open your recreational or medical cannabis dispensaries.

Annual permit renewal costs $30,000. You are also required to prove $50,000 in escrow and demonstrate adequate capitalization. Note that there are many other extra fees associated with operating a dispensary.

These include a $25,000 dispensary registration renewal fee and $50(each) dispensing agent renewal, identification card replacement and registration replacement fee. Illinois dispensary licensure is based on a 250-point system. Below are some of the ways that the points are scored:

  • Security and record-keeping
  • Business plan, financials, floor plan and operations plan
  • Suitability of human resource training plan
  • Cannabis-related knowledge/experience
  • Diversity plan
  • Employment and Labor practices

It is worth noting that you will spend considerable resources on regulation compliance, and you need to plan ahead for this.  medical cannabis card consume cannabis pre rolled

Illinois Cannabis Dispensary Application

Once your license has been approved, you will only have 6 months (180 days) to select a physical location for your dispensary storefront.

The location has to meet certain requirements. They are detailed below:

  • Has to be suitable for access by the public
  • Must have a layout that facilitates safe dispensation of cannabis
  • Has to be sufficient in size, lighting, power allocation, product handling and storage
  • Must have adequate parking and handicapped-accessible entry and exit spaces.
  • Should not be located within 1,000 feet of another dispensary, school, residential zone or place of worship.

Given these requirements, developing a complaint dispensary can cost anywhere from $500,000 to $2.5 million depending on size, layout and complexity.

It is also essential to ensure that the owner of the property where your dispensary will be located is okay with the business venture.

Some property owners may not support a cannabis-related business due to federal illegality, potential liabilities or pressure from law enforcement.

The Cannabis Regulation & Tax Act specifies the type of client a marijuana dispensary will be allowed to attend to. Illinois residents will be able to buy marijuana for recreational purposes but with the following stipulations;

  • 1. Show proof of age before purchase.
  • 2. The sell, transferring or distribution of marijuana to minors shall remain a punishable offense.
  • 3. Driving under the influence of cannabis shall remain illegal.
  • 4. Cannabis sale shall be conducted in a legitimate manner by taxpaying citizens.
  • 5. Cannabis shall be tested and appropriately labelled for the user’s benefit.
  • 6. Buyers will be furnished by all the information available about any established negative effects of cannabis use backed by evidence-based research.

Different types of dispensary licenses in Illinois

There are three types of licenses under the dispenser’s category defining the manner in which business people can supply marijuana in the state. The three include;

  • 1. The Early Approval Adult Use Dispensing Organization License.
  • 2. The Conditional Adult Use Dispensing Organization License.
  • 3. The Adult Use Dispensing Organization License is commonly referred to as just a dispensary license.

Guidelines for an Adult Use Dispensing Organization License

This is the license that has all interested parties excited. The license will allow associated businesses to buy cannabis from craft growers, cultivation centers, processing organizations or other dispensaries. With this kind of license dispensaries have the green light to sell cannabis and infused products, paraphernalia, seeds to other suppliers or purchasers. These will also have the go ahead to sell to patients using cannabis to treat medical conditions.

To apply for the license individuals will have to part with a non-refundable application fee of $30,000. Once the license is awarded, the dispensary will have to get a renewal after a year and this will cost $60,000. Such licenses have already been issued across the state with the Department hoping to give out 110 more licenses by 21st December 2021.


With the right motivation and access to necessary resources, this guide can help you successfully start a profitable cannabis dispensary. It is important to note that this process takes time even when you have the resources.

Given the licensure steps, finding a suitable location, and developing your storefront to meet the state requirements, it may take well over a year to open your dispensary even after being awarded a license.

Want to win a license?

Here’s where you can learn how we’ve won before and will again.