How to Review Your Cannabis Application for Higher Scores

How to Review Your Cannabis Application for Higher Scores

We will review and critique your cannabis license application with an eye toward scoring and any possible litigation risks that it may have.

Cannabis Application Review should center around being comprehensive and robust and going above and beyond the statutory requirements for getting a cannabis license in your state.  We will use the Illinois application for review because it contained everything under the sun in cannabis, including social equity.  The process for reviewing an application before its submission requires an eye for detail and legal compliance, so have a cannabis lawyer, or a cannabis consultant with a law license, to review your team’s license application. 

Cannabis Application Review for Scoring

It’s May, 2020, which means that Illinois will soon be awarding 75 cannabis dispensary licenses to lucky, qualified applicants. Meanwhile, after multiple delays we just passed the deadline craft grower, infuser, and transporter applications. We were proud to submit several highly qualified teams, and we’re optimistic about all of them. All of this means that there are thousands of applicants anxiously waiting to know the answer to one simple question: how did I do

Unfortunately, besides those lucky 75 winners, there are going to be hundreds, perhaps literally thousands of disappointed applications who do not win one of Illinois’s coveted licenses. In other states, a lack of transparency has created a small cottage industry for lawyers suing on behalf of disappointed dispensary and grower applicants. While Illinois government has a certain reputation for questionable behavior, the simple fact is that we’re dealing with essentially a brand new licensing process in a brand new industry, so there are a lot of unknowns.

Suing your state can be a lot of fun, but it’s also a serious deal. Lawsuits are expensive, just like financing a cannabis business. So we’ve created this helpful guide to help you evaluate your own cannabis dispensary application, based on the application created by the Illinois Department of Financial and Professional Regulation (IDFPR).

This Cannabis Application Review guide is designed for people who are thinking of applying for a dispensary license, or who are in the middle of an application, or even those who have applied and lost, and are considering appealing that decision to the State.


The IDFPR scores Cannabis applications in the following manner:

  • Suitability of Employee Training Plan (15 points)
  • Security and Record Keeping (65 points)
  • Business Plan, Financials, Operating Plan, and Floor Plan (65 points)
  • Knowledge and Experience in Cannabis or Related Fields (30 points)
  • Status as a Social Equity Applicant (50 points)
  • Labor and Employment Practices (5 points)
  • Environmental Plan (5 points)
  • Illinois Owner (5 points)
  • Status as a Veteran (5 points)
  • Diversity Plan (5 points)

Total:  250 Points

These points are awarded across twenty exhibits. The full list of exhibits includes:

  1. Photocopy of the Non-Refundable Application Fee
  2. Principal Officer Application Form(s)
  3. Business Entity Operating Agreement, By-Laws, or Articles of Incorporation and Table of Organization, Ownership and Control
  4. Dispensing Organization Agent Training and Education
  5. Purchaser Education Plan
  6. Business Plan
  7. Recalls, Quarantine, and Destruction Plan
  8. Security Plan
  9. Inventory Monitoring and Recordkeeping Plan
  10. Proposed Floor Plan
  11. Operating Plan
  12. Plan for Community Engagement
  13. Diversity Plan
  14. Anonymous Knowledge and Experience of Principal Officers
  15. Financial Information
  16. Evidence of Status as a Social Equity Applicant, if applying as a Social Equity Applicant
  17. Labor and Employment Practices Plan (optional)
  18. Environmental Plan (optional)
  19. Evidence of Status as an Illinois Owner (optional)
  20. Evidence of Status as a Veteran (optional)

As you can see, some of these exhibits are very complex, while others are fairly straightforward. In its initial QA round, the IDFPR acknowledged that the point system and the exhibits didn’t really match up, but opaquely told applicants to go with the point system in the Cannabis Regulation and Tax Act (CRTA). Therefore, we’ve broken this guide down based on scoring criteria.

Suitability of Employee Training Plan (15 points)

The plan includes an employee training plan that demonstrates that employees will understand the rules and laws to be followed by dispensary employees, have knowledge of any security measures and operating procedures of the dispensary, and are able to advise purchasers on how to safely consume cannabis and use individual products offered by the dispensary. [410 ILCS 705/15-30(c)(1)]

Key Documents: Exhibit D

Applicants should have a full, comprehensive employee training plan that covers the areas described in CRTA. Many applicants are tempted to fill Exhibit D with vague descriptions, e.g. “we will train our employees on following the law” or “employees will be trained on customer interaction.”  However, as the IDFPR describes in its application form, applicants should “provide a plan that describes the training and education that will be provided to dispensing organization employees.” That means you want something closer to a full curriculum, given the 15 page limit on Exhibit D. Here are some factors to look at:

  1. Are your employees going to obtain Responsible Vendor training?
  2. Are your employees going to receive privacy training?
  3. What about security training and protocols?
  4. Do your employees receive the mandatory 1-hour sexual harassment training?
  5. Are you maintaining records of the 8-hour training requirement?
  6. Do your employees have prior cannabis experience and/or education?
  7. In addition to Responsible Vendor training, will you provide the minimum of eight (8) hours of annual training?
  8. Will you pursue independent training or certification from other parties (Green Cultured, Hempstaff, etc.?)

Security and Recordkeeping (65 points)

The security plan accounts for the prevention of the theft or diversion of cannabis. The security plan demonstrates safety procedures for dispensing organization agents and purchasers, and safe delivery and storage of cannabis and currency. It demonstrates compliance with all security requirements in this Act and rules. [410 ILCS 705/15-30(c)(2)(A)]

A plan for recordkeeping, tracking, and monitoring inventory, quality control, and other policies and procedures that will promote standard recordkeeping and discourage unlawful activity. This plan includes the applicant’s strategy to communicate with the Department and the Department of State Police on the destruction and disposal of cannabis. The plan must also demonstrate compliance with this Act and rules. [410 ILCS 705/15-30(c)(2)(B)]

The security plan shall also detail which private security contractor licensed under Section 10-5 of the Private Detective, Private Alarm, Private Security, Fingerprint Vendor, and Locksmith Act of 2004 the dispensary will contract with in order to provide adequate security at its facility. [410 ILCS 705/15-30(c)(2)(C)]

Key Documents: Exhibit H, Exhibit I

This section is tied for the most points among the different scoring criteria, so pay extra close attention to it. Security was arguably the biggest concern for the Illinois General Assembly in getting the CRTA passed into law, and for good reason. We’ve written a lot about cannabis security before, but it bears repeating: take security seriously.

You can have up to 50 pages in Exhibit H, so use them! On the other hand, Exhibit I is only 15 pages, so make sure you don’t go over. Here are some of the big issues to consider in evaluating your security and recordkeeping plan:

Security Plan

  1. Has your security plan been reviewed by the state police (not required, but a good idea)?
  2. Will your facility have a security guard just during operating hours, or 24/7?
  3. Does your security equipment meet the specs of Section 15-100 of the Act?
  4. Are your employees given any security training?
  5. Does your facility have glass break sensors?
  6. Is your private security contractor properly licensed?
  7. Will your security system stay operational during a power outage? For at least four hours?
  8. Does your vault meet the requirements of the DEA’s requirement for Schedule I controlled substances?

Recordkeeping Plan

  1. Are you conducting a daily inventory and reconciliation?
  2. Will you set up an account with the State’s verification system prior to opening?
  3. Do you maintain a record of voided sales through your POS system?
  4. What are the specs on your data retention system?
  5. Are the necessary records kept on site for the state to review?

Business Plan, Financials, Operating Plan, and Floor Plan (65 points)

The business plan shall describe, at a minimum, how the dispensing organization will be managed on a long-term basis. This shall include a description of the dispensing organization’s point-of-sale system, purchases and denials of sale, confidentiality, and products and services to be offered. It will demonstrate compliance with this Act and rules. [410 ILCS 705/15-30(c)(3)(A)]

The operating plan shall include, at a minimum, best practices for day-to-day dispensary operation and staffing. The operating plan may also include information about employment practices, including information about the percentage of full-time employees who will be provided a living wage. [410 ILCS 705/15-30(c)(3)(B)]

The proposed floor plan is suitable for public access, the layout promotes safe dispensing of cannabis, is compliant with the Americans with Disabilities Act and the Environmental Barriers Act, and facilitates safe product handling and storage. [410 ILCS 705/15-30(c)(3)(C)]

Key Documents: Exhibit F, Exhibit J, Exhibit K, Exhibit O

This section is also worth a massive 65 points, and spans four exhibits. The broad theme across these exhibits is that the IDFPR wants you to show them that you have the business acumen to actually run a dispensary, and provide the state with a reliable flow of tax dollars. So, here are some issues to consider:

Business Plan

  1. Describe your POS system
  2. Do you have a plan to track denials of sales?
  3. How will you maintain purchaser confidentiality?
  4. What products and services will you offer?
  5. How much cannabis will you store at the facility?

Proposed Floor Plan

This section stands out compared to most other exhibits. The IDFPR provides a list of nineteen (19) items that the floor plan must show at a minimum. The full list is here, and should be reviewed in full. In addition, consider the following issues:

  1. What are the specific security devices you will be using? Are they up to the specs provided for in the CRTA?
  2. Do you comply with the Americans with Disabilities Act (ADA)?
  3. Do you comply with the Environmental Barriers Act?
  4. How does your facility design handle product handling and storage?
  5. Will your facility impact the nearby community? Have you talked with local community groups, neighbors, and the local government?
  6. Does your security vault meet the standards of the DEA’s requirement for Schedule I controlled substances?
  7. Is there a restricted access area as set forth in Section 15-25(d)(11)(B) of the CRTA?
  8. Do you have a plan for delivery vehicles to safely and securely access the facility?
  9. Do you have a proposed alarm service provider?
  10. Does the facility comply with local zoning laws regarding the number of purchasers allowed in the dispensary?
  11. Is there a solid barrier between the public access area and the limited access area?

Operating Plan

  1. What are the day-to-day staffing plans for the facility?
  2. What percentage of workers will be paid a living wage?
  3. Do you comply with the restrictions on hours of operation (6:00 a.m. to 10:00 p.m.)?
  4. How will you ensure proper handling of products, including inventory?

NOTE: Information like health care benefits, retirement benefits, and so on should be part of Exhibit Q, Labor and Employment Practices Plan, and not the Operating Plan

Financial Information

  1. Does your financing plan give up ownership of the company? If so, do you lose social equity ownership status?
  2. Do you have access to additional capital if necessary?
  3. Are you self-financing? To what extent?
  4. If you’re applying for financing from the Department of Commerce and Economic Opportunity (DECO), did you inform the Department as required in Exhibit O?
  5. If you’re applying for multiple licenses, do you have financing for all of the proposed sites?
  6. Do you have future financial projections demonstrating the ability of future financing?

Knowledge and Experience in Cannabis or Related Fields (30 points)

The applicant’s principal officers must demonstrate experience and qualifications in business management or experience with the cannabis industry. This includes ensuring optimal safety and accuracy in the dispensing and sale of cannabis [410 ILCS 705/15-30(c)(4)(A)]

The applicant’s principal officers must demonstrate knowledge of various cannabis product strains or varieties and describe the types and quantities of products planned to be sold. This includes confirmation of whether the dispensing organization plans to sell cannabis paraphernalia or edibles [410 ILCS 705/15-30(c)(4)(B)]

Knowledge and experience may be demonstrated through experience in other comparable industries that reflect on the applicant’s ability to operate a cannabis business establishment. [410 ILCS 705/15-30(c)(4)(C)]

Key Documents: Exhibit N.

This section gets to the main tension in cannabis business applications. The state wants experienced, reliable, Illinois-based professionals to spearhead the Illinois adult-use market. Of course, the Illinois medical market is a few years old, and the adult-use market is a few months old. So in theory, anyone with meaningful legal cannabis experience is from another state (California, Washington, Oregon and Colorado in particular). Applicants want to show business success in similar or related fields, such as consumer goods and retail.

Applicants can also show success in security or highly regulated industries- some of the biggest names in Illinois cannabis were started by lawyers.

The IDFPR gave some particularly useful guidance in this area. In the second round of QA, the IDFPR stated that:

Points for Exhibit N (Knowledge and Experience of Principal Officers) for both the knowledge and experience elements of this Exhibit will be awarded on a binary basis, meaning applicants will receive either 15 points or 0 points for demonstrating knowledge of cannabis and either 15 points or 0 points for demonstrating experience and qualifications in business management or experience with the cannabis industry.

So, you either have cannabis knowledge, or you don’t. And you either have business management/cannabis industry experience, or you don’t. Here are some things to consider:

  1. Scoring is based only on the principal officers; outside consultants do not count
  2. Do they have experience in the comparable industries listed by the IDFPR, such as liquor stores, pharmacies, grocery stores, tobacco stores, restaurants, or retail stores
  3. Do the principal officers have any cannabis experience, either as employees, owners, or outside consultants?
  4. Do the principal officers have high level experience and/or success in business more generally?

Status as a Social Equity Applicant (50 points)

The applicant meets the qualifications for a Social Equity Applicant as set forth in this Act. [410 ILCS 705/15-30(c)(5)]

Key Documents: Exhibit P

Social equity status is fairly straightforward– you either qualify, or you don’t. Since social equity status is worth 50 out of a possible 250 points, it is difficult, if not impossible to win without qualifying as a social equity applicant. The biggest hurdle many applicants will face is providing appropriate documentation. It is not enough to simply say that you live in Illinois, or have been convicted of a qualifying cannabis offense. You need documentation to prove it. To qualify as a social equity applicant, you need to establish the following:

  1. Evidence of status as an Illinois resident:
    1. For businesses, this means your incorporation documents such as articles of incorporation or articles of organization
    2. For individuals, you need two of the following: a signed lease agreement, property deed, school records, voter registration card, Illinois driver’s license or ID card, paycheck stub, utility bill, or any other proof of residency. You need to be an Illinois resident for at least 30 days.

AND one of the following:

  1. Evidence that 51% of the ownership has lived in a Disproportionately Impacted Area (DIA) for 5 of the last 10 years (through tax filings, leases, mortgages, paycheck stubs, etc.)
  2. Evidence that 51% of the ownership has been arrested for, convicted of, or adjudicated delinquent for any of the offenses expunged by CRTA
  3. Evidence that 51% of the ownership has a parent, guardian, child, spouse, dependent, or was a dependent of an individual who was arrested for, convicted of, or adjudicated delinquent for any of the offenses eligible for expungement under the CRTA.
  4. Evidence that the applicant employs 10 or more full-time employees and that 51%+ of those employees qualify as social equity applicants for reasons #1-3 above
    1. You need evidence that the employees were engaged in full time work as of the date of the application (for example, payroll reports)

Labor and Employment Practices (5 points)

The applicant may describe plans to provide a safe, healthy, and economically beneficial working environment for its agents, including, but not limited to, codes of conduct, health care benefits, educational benefits, retirement benefits, living wage standards, and entering a labor peace agreement with employees [410 ILCS 705/15-30(c)(6)]

Key Documents: Exhibit Q

As with social equity, the points for the Labor and Employment Practices Plan are awarded on a binary basis- you get all five points, or you get zero. Your plan should have the following components:

  1. Code of conduct
  2. Employer-provided health benefits
  3. Employer-provided education benefits
  4. Employer-provided retirement benefits
  5. Commitment to provide a living wage
    1. This is an amount above the minimum wage in the BLS region in which you’re applying
  6. An executed labor peace agreement
  7. Specific and verifiable employee benefit plan, other than the benefits listed above

Environmental Plan (5 points)

The applicant may demonstrate an environmental plan of action to minimize the carbon footprint, environmental impact, and resource needs for the dispensary, which may include, without limitation, recycling cannabis product packaging. [410 ILCS 705/15-30(c)(7)]

Key Documents: Exhibit R

The environmental plan has a paltry 5-page limit. As with several other exhibits, you either get all of the points, or none of them. The IDFPR provided very little guidance on this issue, but here are some things to consider for your environmental plan:

  1. Do you have a plan for renewable energy?
  2. Do you have a plan for recycling cannabis product packaging?
  3. Will your building meet some kind of green standards, such as LEED certification?
  4. How will you reduce or eliminate paperwork?

Illinois Owner (5 points)

Key Documents: Exhibit S.

This is perhaps the most straight-forward exhibit. You simply need adequate proof of Illinois residency, the same as with social equity status. Specifically, you need two of the following:

  1. A signed lease agreement that includes the applicant’s name;
  2. A property deed that includes the applicant’s name;
  3. School records;
  4. A voter registration card;
  5. An Illinois driver’s license, an Illinois Identification Card, or an Illinois Person with a Disability Identification Card;
  6. A paycheck stub;
  7. A utility bill; or
  8. Any other proof of residency or other information necessary to establish residence as provided by rule.

There are a few pitfalls to avoid. Remember, you have to be a resident for five of the last ten years. And if you’re going to use just your tax forms, you need to provide your IL-1040 tax forms. On the other hand, if you use an Illinois driver’s license, that license shows residency for each year in which the license is valid. So if you have a license valid for, say, the last five years, you qualify.

Status as a Veteran (5 points)

The applicant is 51% or more controlled and owned by an individual or individuals who meet the qualifications of a veteran as defined by Section 45-57 of the Illinois Procurement Code. [410 ILCS 705/15-30(c)(9)]

Key Documents:

The Illinois Procurement Code provides a very broad definition of “veteran.” Nearly anyone who has served in the military should qualify, so qualifying as a veteran is simply a matter of providing the appropriate documentation. Section 45-57 of the Illinois Procurement Code defines a “veteran” as follows:

“Veteran” means a person who (i) has been a member of the armed forces of the United States or, while a citizen of the United States, was a member of the armed forces of allies of the United States in time of hostilities with a foreign country and (ii) has served under one or more of the following conditions: (a) the veteran served a total of at least 6 months; (b) the veteran served for the duration of hostilities regardless of the length of the engagement; (c) the veteran was discharged on the basis of hardship; or (d) the veteran was released from active duty because of a service connected disability and was discharged under honorable conditions.

In our experience, veterans most commonly show proof by producing their DD214. Obtaining your DD214 can take some time, but it’s a fairly easy process.

Diversity Plan (5 points)

A diversity plan (5 points): that includes a narrative of not more than 2,500 words that establishes a goal of diversity in ownership, management, employment, and contracting to ensure that diverse participants and groups are afforded equality of opportunity. [410 ILCS 705/15-30(c)(10)]

Key Documents: Exhibit M

Points are awarded for the Diversity Plan on a binary basis- you get all 5, or you get 0. The Diversity Plan has a limit of 2,500 words (around 10 pages, double-spaced), so make sure to use the full amount! One especially important thing to remember is that a diverse company should reflect the local community. What this means is that a Diversity Plan in Chicago is different than a Diversity Plan in Springfield, because the two cities have very different demographics. On the other hand, while the cannabis industry is disproportionately male, your community is probably 50% female and your Diversity Plan should reflect that. Here are some factors to consider in evaluating your Diversity Plan:

  1. Do you address equality of opportunity in ownership, management, employment, and contracting?
  2. Talk about the social equity status of your owners, managers, and employees (e.g., “we are proud to be a minority-owned business”)
  3. Will you seek out Minority and Women Owned Businesses (MWOBs)?
  4. What is your policy towards discriminatory behavior and harassment? Is it a zero tolerance policy?
  5. If you’re a social equity applicant, how will you ensure that you keep social equity status?
  6. How will your hiring practices reflect the community around you (e.g., going to local job fairs, working with local diverse chambers of commerce)


Simply put, there is a lot that goes into a cannabis dispensary application review. That’s why even the most sophisticated, well-financed applicants should consider retaining a consultant to guide them through the process. At the same time, applications are going to be scored by humans, by a scoring criteria developed by humans. And that means there will be mistakes, inconsistencies, and other problems. Use this guide to determine whether you really submitted the best application you could. And if you did (and that’s great!), maybe it’s time to consider taking serious action against the State.

Thomas Howard has been in business for years and can help yours navigate towards more profitable waters.

Our cannabis business attorneys are also business owners.  They can help you structure your business or help protect it from overly burdensome regulations.

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