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Social Equity Applicants & Illinois Cannabis

What is a Social Equity Applicant in Illinois Cannabis Legalization?

According to research done in the state of Illinois, it was found that the restrictions from previous laws have made it hard for many people to join the marijuana industry, and this created social inequity that has continued to increase day by day. The new Illinois law aims fix this by creating “Social Equity Applicants” to reduce barriers that have been preventing people in the past from entering the industry thus creating social equity in Illinois cannabis legalization. Such barriers included lack of capital due to poverty, among other factors.

To read the law – Click Here

For Disproportionately Impacted Area Map – Click Here

 

“Social Equity Applicant means an applicant that is an Illinois resident that meets one of the following criteria:

(1) an applicant with at least 51% ownership and control by one or more individuals who have resided for at least 5 of the preceding 10 years in a Disproportionately Impacted Area;

(2) an applicant with at least 51% ownership and control by one or more individuals who:

(i) have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under this Act; or

(ii) is a member of an impacted family;

(3) for applicants with a minimum of 10 full-time employees, an applicant with at least 51% of current employees who:

(i) currently reside in a Disproportionately Impacted Area; or

(ii) have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under this Act or member of an impacted family.

social equity applicant is

social equity applicant is (1), (2), or (3)

Social Equity Applicant Updates from Dispensary Application

On October 1, 2019 – The State of Illinois released its cannabis dispensary application.  This application had some very important language for your social equity talent in your team.

If the applicant wishes to apply as a Social Equity Applicant, provide evidence of Social Equity Applicant status. Evidence of status as a Social Equity Applicant may be established by providing:

  1. Evidence of the applicant’s status as an “Illinois resident” as demonstrated by incorporation documents, or, if applying as an individual, at least two of the following: (i) a signed lease agreement that includes the applicant’s name, (ii) a property deed that includes the applicant’s name, (iii) school records, (iv) voter registration card, (v) an Illinois driver’s license, ID card, or a Person with a Disability ID card, (vi) a paycheck stub, (vii) a utility bill, or (viii) any other proof of residency or other information necessary to establish residence. A person must have been domiciled in the state for a period of 30 days to be an “Illinois resident” as used in this application; and
  2. Evidence the person or persons owning and controlling more than 51% of the proposed dispensing organization have lived in a Disproportionately Impacted Area for 5 of the preceding 10 years as demonstrated by, but not limited to, tax filings, voter registrations, leases, mortgages, paycheck stubs, utility bills, insurance forms, or school records that include the qualifying principal officers’ names on them; or 
  3. Evidence the person or persons owning and controlling more than 51% of the proposed dispensing organization have been arrested for, convicted of, or adjudicated delinquent for any offense made eligible for expungement by Public Act 101-0027. If the arrest, conviction, or adjudication has been sealed or expunged, provide records of such action; or
  4. Evidence the person or persons owning and controlling more than 51% of the proposed dispensing organization has had a parent, legal guardian, child, spouse, dependent, or was a dependent of an individual who prior to June 25, 2019, was arrested for, convicted of, or adjudicated delinquent for any offense made eligible for expungement by Public Act 101-0027. If the arrest, conviction, or adjudication has been sealed or expunged, provide records of such action. The applicant must also provide evidence of the relationship between the applicant’s principal officer or officers and the person who was arrested for, convicted of, or adjudicated delinquent for any offense made eligible for expungement by Public Act 101-0027; or
  5.  Evidence that the applicant employs 10 or more full-time employees, and evidence that 51% or more of those employees would qualify as Social Equity Applicants under one of the criteria provided for items 2, 3, and 4 above, if the employees were to own and control 51% of the proposed dispensary organization. The applicant may provide evidence as described above for each employee. The applicant shall also provide evidence the employees were engaging in full time work as of the date the application was submitted. If employee information or employment status of employees changes before licenses are awarded, the applicant has a duty to notify the Division of the change in employee information or status.
More About Social Equity in Illinois Cannabis

Compassionate Use of Medical Cannabis Pilot Program Act 2014

The 2014 Compassionate use of Medical Cannabis Pilot Program Act that allowed the use of medical marijuana was extremely limiting to people who wanted to invest in the marijuana industry. This act came with barriers that made it hard for people to own businesses in this sector. The current few owners are not a reflection of the total population of the state because it locked out anyone who did not have the resources or know-how on how to set up a business in this sector.

The social equity program was established after the pilot program was found to be biased. This program was designed to help those who have suffered negatively due to restrictive cannabis laws in the past. The program is also designed to benefit those who live in areas that have been disadvantaged due to marijuana-related arrests and incarcerations. According to the new law,

“The General Assembly further finds and declares that it is necessary to ensure consistency and fairness in the application of this Act throughout the State”.

How Will the New Law Affect the Community?

Legalizing the use of recreational marijuana in Illinois will positively affect everyone in the state, and not just marijuana consumers. In a bid to ensure social equity, the law is designed to make it easy for marginalized communities to have access to dispensary licenses. Additionally, anyone who applies for social equity correctly will score more of the 20% of points awarded to such applicants. These points will be categorized into different classes for applicants for conditional cultivation centers, craft grows, or dispensaries.

According to the law, a social equity applicant will be anyone who is an Illinois resident, having lived in a disproportionately affected part of the state for at least 5 of their last 10 years. These are generally areas where more arrests, convictions, and incarcerations have been made following violation of the cannabis act in the past. Those whose records are obliterated under this act also qualify for social equity.

Which Other Social Issues Will This Law Address?

The bill will take into consideration the rights of employees in the marijuana industry. Unlike in the past where employees in the marijuana industry were discriminated, they will now enjoy the same protection as employees in other industries.

What about the Business Development Fund?

According to this law, “There is created in the State treasury a special fund, which shall be held separate and apart from all other State moneys, to be known as the Cannabis Business Development Fund”.

This is a special kitty specifically set for those who want to get into the marijuana industry. The kitty is designed to be used to finance, support, and make it easy for people who are keen to join the marijuana industry but are disadvantaged in terms of finances.

Some ways in which this fund will help include:

  • Offering loans with low interest rates. These loans will be used by social equity applicants to establish cannabis businesses as long as they are licensed in accordance with the law.
  • Offering grants to social equity applicants who may want to start and operate cannabis businesses but do not have the financial ability to do so.
  • Paying for outreach aimed at benefiting social equity applicants
  • Paying for research designed to encourage the participation of women, the disabled, and minority groups within the society.

Why the Social Program Is a Good Idea

Those who are incarcerated or arrested often suffer from long-lasting negative effects. This is because most employers will not employ anyone with a record, while others simply discriminate against ex-convicts. In fact, those who have been arrested in the past because of possessing marijuana continue to suffer even after the use of the same has been made legal. The spouses, children, and relatives of the affected also suffer financially and emotionally when their kin go to prison.

This program offers both license application benefits and financial aid to people who are affected by cannabis-related enforcement laws either directly or indirectly.

Who Qualifies to Apply for Social Equity?

Social equity applicants are individuals who meet the minimum requirements to qualify for a conditional license to operate a marijuana business within the state. Some of these requirements include:

  • An individual residing in the area that qualifies for the social equity consideration. Residing in this case means having a signed lease that has the applicant’s name or a property deed.
  • A voter card, a driving license, a paycheck, and any form of identification card will be used to determine residency.

What Does the Law Say About EX-Convicts?

Those who have served time for marijuana possession and use are also considered in the law. According to the new Illinois law, once an offense is sealed or expunged, an employee will not be required to disclose their past offense to a potential employer. That being said, the law is not designed to limit an employer as far as duties are concerned.  An employer still has a right to do a background check and follow the same employment procedures they use for other employees.

What Do You Do If You Qualify to Benefit From the Social Equity Provision?

There is no doubt that the cannabis industry is lucrative. If you want to set up a business in this industry and qualify for social equity consideration, you should consider submitting your application under the social equity category.

If you are lucky, you application may not only get approved but you may also benefit from state funding that could set your business rolling and put it ahead of competition. The good news is that the funding is not only extremely affordable but within the reach of the disadvantaged residents in Illinois.

Get in touch with a qualified cannabis lawyer if you are unsure of the application process or if you do not know how to best benefit from your social equity points.

 

Social Equity Script

What up, I’m Tom – find me by googling Cannabis lawyer, then clicking my website, cannabis industry lawyer.com.  An online resource for all your questions about navigating the cannabis industry – like today’s hot topic in Illinois – Social Equity Applicants.  

We are going to get right into it and you will know this law better than 99% of the people if you watch until the end, mind exploding stuff there  – but by the laws of YouTube, I must remind you to like and subscribe.  

Let’s dive in.

Section 7 of the Law relates to social equity applicants – but we cannot just dive in there just yet — first we need to review the literal definition of a social equity applicant under Illinois law – for the we go to the definitions.

“Social Equity Applicant” means an applicant that is an Illinois resident that meets one of the following criteria:

(1) an applicant with at least 51% ownership and control by one or more individuals who have resided for at least 5 of the preceding 10 years in a Disproportionately Impacted Area;

(2) an applicant with at least 51% ownership and control by one or more individuals who:

(i) have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under this Act; or

(ii) is a member of an impacted family;

(3) for applicants with a minimum of 10 full-time employees, an applicant with at least 51% of current employees who:

(i) currently reside in a Disproportionately Impacted Area; or

(ii) have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under this Act or member of an impacted family.

social equity

social equity

Did you see the difference – small companies need both “ownership and control” of the social equity applicants, but large companies just need the raw numbers of employees.  Then you can keep control and management however you want.

On the other hand, the board of directors – the owners and controllers of the company really becomes a team building exercise – and can’t wait to help you out on that.

Now that we know what a Social Equity Applicant is – why do we want to be one of them?  Because the law preferences them in 2 very clear ways: 1) by providing at least 20% of the points for scoring dispensary and craft grow applications and 2) by providing access to low interest government loans to lower the barriers to entering the legal cannabis market.

Section 7-10 of the new cannabis law creates a Cannabis Business Development Fund to provide low-interest rate loans to social equity applicants to pay for business expenses required to operate their cannabis business.

Further, grants are available to “qualified social equity applicants” to pay for ordinary and necessary business expenses to start and run their cannabis business.

What’s a “qualified social equity applicant”?  We go back to the definitions to find it is a: 

“Qualified Social Equity Applicant” means a Social Equity Applicant who has been awarded a conditional license under this Act to operate a cannabis business establishment.

Great – what’s a “conditional license”?

“Conditional Adult Use Dispensing Organization License” means a license awarded to top-scoring applicants for an Adult Use Dispensing Organization License that reserves the right to an adult use dispensing organization license if the applicant meets certain conditions described in this Act, but does not entitle the recipient to begin purchasing or selling cannabis or cannabis-infused products.

Okay, a dispensary that is gotten, but before it is open – Coool…you can try to get grants if your Social Equity applicant  status gets you the license…then you apply for the grants…then you build then open.. Can we grow cannabis and get the grant?  Let’s check.

Oh cool, there is a conditional cultivation license.

“Conditional Adult Use Cultivation Center License” means a license awarded to top-scoring applicants for an Adult Use Cultivation Center License that reserves the right to an Adult Use Cultivation Center License if the applicant meets certain conditions as determined by the Department of Agriculture by rule, but does not entitle the recipient to begin growing, processing, or selling cannabis or cannabis-infused products.

Well how many licenses are there?  30 – Cool, but wait the current players get grandfathered, so how many are those, 20 – nuts, okay we are down to 10.  Right.

Well maybe it’s ever worse than that because,

Section 20-15. Conditional Adult Use Cultivation Center application. (a) If the Department of Agriculture makes available additional cultivation center licenses pursuant to Section 20-5, applicants for a Conditional Adult Use Cultivation Center License shall electronically submit the following in such form as the Department of Agriculture may direct:

So for conditional adult use cultivation to happen, more than the current 10 spots need to come online, bummer, so let’s just concentrate on those dispensary grants and see what types of financing is available. 

(c) Loans made under this Section: 

(1) shall only be made if, in the Department’s judgment, the project furthers the goals set forth in this Act; and 

(2) shall be in such principal amount and form and contain such terms and provisions with respect to security, insurance, reporting, delinquency charges, default remedies, and other matters as the Department shall determine appropriate to protect the public interest and to be consistent with the purposes of this Section. The terms and provisions may be less than required for similar loans not covered by this Section. 

(d) Grants made under this Section shall be awarded on a competitive and annual basis under the Grant Accountability and Transparency Act. Grants made under this Section shall further and promote the goals of this Act, including promotion of Social Equity Applicants, job training and workforce development, and technical assistance to Social Equity Applicants.

So that gets us to a question – we make the best applications, so we want to have the social equity points, but do we incorporate the grant writing process into the applications  – we believe that you have to to maximize the points.


20% of your application is going to you as a social equity applicant.  But it looks like a lot of people qualify, over 800,000 open for expungement under the law, and people living in impoverished communities – but what does your dispensary bring to that community to help fix the problems of the drug war?  Well this is where the whole story of your company can really flourish and bring positive change to the community.  

These need to go into your training plan and community outreach.  Imagine if your dispensary sponsors an expungement and job fair each year?  In partnerships with local bar associations and cannabis businesses that need trained staff.

Those are the things that your company – especially if going for the social equity points – must consider when putting together its cannabis license application.

Do you bank on the loans? – no way.  You are never entitled to a loan, or grant – you must qualify.  Have financing in order either way. The applications will be expensive to ship because of how large they are – and despite what some people may believe, lawyers need to be paid for their time and labor. Especially if your lawyer is commercially sophisticated enough to have private offerings of less than five million dollars and preferred shares for additional participation by social equity applicants

exit

Thanks for joining me on this episode – remember, marijuana legalization is only a few months away – so start putting your plans together for dispensaries & Subscribe to state up to date. And if you need my help, just google cannabis lawyer and get in touch with me.  See you soon.

Compassionate Use of Medical Cannabis Pilot Program Act 2014

The 2014 Compassionate use of Medical Cannabis Pilot Program Act that allowed the use of medical marijuana was extremely limiting to people who wanted to invest in the marijuana industry. This act came with barriers that made it hard for people to own businesses in this sector. The current few owners are not a reflection of the total population of the state because it locked out anyone who did not have the resources or know-how on how to set up a business in this sector.

The social equity program was established after the pilot program was found to be biased. This program was designed to help those who have suffered negatively due to restrictive cannabis laws in the past. The program is also designed to benefit those who live in areas that have been disadvantaged due to marijuana-related arrests and incarcerations. According to the new law, “The General Assembly further finds and declares that it is necessary to ensure consistency and fairness in the application of this Act throughout the State.”

How Will the New Law Affect the Community?

Legalizing the use of recreational marijuana in Illinois will positively affect everyone in the state, and not just marijuana consumers. In a bid to ensure social equity, the law is designed to make it easy for marginalized communities to have access to dispensary licenses. Additionally, anyone who applies for social equity will automatically get 25 bonus points. These points will be categorized into different classes for applicants with social equity and those based in Illinois.

According to the law, a social equity applicant will be anyone who is an Illinois resident, having lived in a disproportionately affected part of the state for at least 5 of their last 10 years. These are generally areas where more arrests, convictions, and incarcerations have been made following violation of the cannabis act in the past. Those whose records are obliterated under this act also qualify for social equity.

Which Other Social Issues Will This Law Address?

The bill will take into consideration the rights of employees in the marijuana industry. Unlike in the past where employees in the marijuana industry were discriminated, they will now enjoy the same protection as employees in other industries.

What about the Business Development Fund?

According to this law, “There is created in the State treasury a special fund, which shall be held separate and apart from all other State moneys, to be known as the Cannabis Business Development Fund”.
This is a special kitty specifically set for those who want to get into the marijuana industry. The kitty is designed to be used to finance, support, and make it easy for people who are keen to join the marijuana industry but are disadvantaged in terms of finances.

Some ways in which this fund will help include:

  • Offering loans with low interest rates. These loans will be used by social equity applicants to establish cannabis businesses as long as they are licensed in accordance with the law.
  • Offering grants to social equity applicants who may want to start and operate cannabis businesses but do not have the financial ability to do so.
  • Paying for outreach aimed at benefiting social equity applicants
  • Paying for research designed to encourage the participation of women, the disabled, and minority groups within the society.

Why the Social Equity Program Is a Good Idea

Those who are incarcerated or arrested often suffer from long-lasting negative effects. This is because most employers will not employ anyone with a record, while others simply discriminate against ex-convicts. In fact, those who have been arrested in the past because of possessing marijuana continue to suffer even after the use of the same has been made legal. The spouses, children, and relatives of the affected also suffer financially and emotionally when their kin go to prison.

This program offers both license application benefits and financial aid to people who are affected by cannabis-related enforcement laws either directly or indirectly.

Who Qualifies to Apply for Social Equity?

Social equity applicants are individuals who meet the minimum requirements to qualify for a conditional license to operate a marijuana business within the state. Some of these requirements include:
 
  • An individual residing in the area that qualifies for the social equity consideration. Residing in this case means having a signed lease that has the applicant’s name or a property deed.
  • A voter card, a driving license, a paycheck, and any form of identification card will be used to determine residency.

What Does the Law Say About EX-Convicts?

Those who have served time for marijuana possession and use are also considered in the law. According to the new Illinois law, once an offense is sealed or expunged, an employee will not be required to disclose their past offense to a potential employer. That being said, the law is not designed to limit an employer as far as duties are concerned. An employer still has a right to do a background check and follow the same employment procedures they use for other employees.

What Do You Do If You Qualify to Benefit From the Social Equity Provision?

There is no doubt that the cannabis industry is lucrative. If you want to set up a business in this industry and qualify for social equity consideration, you should consider submitting your application under the social equity category.

If you are lucky, you application may not only get approved but you may also benefit from state funding that could set your business rolling and put it ahead of competition. The good news is that the funding is not only extremely affordable but within the reach of the disadvantaged residents in Illinois.

Get in touch with a qualified cannabis lawyer if you are unsure of the application process or if you do not know how to best benefit from your social equity points.

Thomas Howard

Thomas Howard

Cannabis Lawyer

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

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