Illinois Legalization Bill Lands with Promised Focus on Social Equity

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Two years of work to build support for a measure that would legalize adult-use cannabis in Illinois took concrete form this weekend as Governor J.B. Pritzker announced the much-anticipated legislation, setting up a key test on a major campaign trail promise from the state’s new governor and from Democratic leaders.

The 522-page bill, which contains far-reaching social equity, tax and health implications, faces a tight timeline. The measure is expected to be formally introduced Monday and hearings held in the House and Senate before the end of the legislative session on May 31.

In other words, Illinois lawmakers, including House sponsor Representative Kelly Cassidy and Senate sponsor Senator Heather Steans, both from the Chicago area, have about four weeks to accomplish what no state has done successfully by legislature: pass one bill that would legalize cannabis possession and use and would set up a regulatory and tax structure for sales. On top of that, the bill has robust equity provisions. Cassidy told Cannabis Wire months ago “this is the hill I will die on. This is my ‘why.’ Doing the social justice piece is the reason I’m doing this. We want to be the model.”

The bill would: ensure small businesses and disadvantaged communities and applicants receive priority in the state’s business licensing process, expunge past convictions related to cannabis, and deliver dollars to communities most affected by America’s drug war.

The bill also allows for home grown cannabis, among other provisions.

At the bill’s announcement Saturday at the Black United Fund of Illinois on the South Side of Chicago, Pritzker emphasized that Illinois policymakers looked closely at what had worked and what hadn’t in other states. Namely, he said, Illinois would be the first state that successfully ensures that disadvantaged communities and business applicants have a place in Illinois’ new cannabis marketplace. Black and brown business owners are estimated to be less than 1% of all business owners in the US cannabis industry.

“Starting with equity as our north star, this framework reflects some of our most deeply held priorities for legalization,” Pritzker said at the bill’s announcement. “Equity guided the conversation on every component of this process, from licensing and revenue to sentencing laws and expungement. In hindsight, a lot of states got it wrong on licensing because their programs ended up with the unintended consequence of a consolidated marketplace where only a few profit.”

The state’s proposed scoring system for new businesses gives additional points for traditionally-marginalized business owners and sets aside $20 million in low-interest loans for such applicants. (See more about the bill’s key provisions below).

Legalization supporters will have to contend with a vocal opposition coalition led by the national anti-legalization group Smart Approaches to Marijuana (SAM). The group’s Illinois chapter sent out an email blast this weekend with the names and office phone numbers of a dozen key House members that SAM hopes to sway against legalization. SAM says they are planning to target key swing lawmakers and, especially, members of the legislative Black Caucus deemed as vital supporters for the bill’s prospects.

Omari Prince, the field director for SAM Illinois, told Cannabis Wire that the group is starting with House members because of backing SAM has received from Representative Marty Moylan, a Democrat from Des Plaines, who has emerged as the group’s key ally. Moylan has introduced a resolution, HR 157, which calls on the General Assembly to slow down what it calls a “rush” for “irresponsible legislation.” The resolution has 60 co-sponsors, enough to pass the House if it gets a vote.

“They’re thinking about their constituents,” Prince said of SAM’s list. “Do they really want a drug store in their district? [They think] ‘Is my district going to thrive?’ I get their concerns. No one wants a drug store.”

Representative Cassidy told Cannabis Wire in an interview that she didn’t know why so many had signed onto a resolution calling for the state to slow down on legalization. But she said that because she and Steans introduced a cannabis legalization measure two years ago—when they knew it had little chance given the stated opposition of then-Governor Bruce Rauner, a Republican— and held town halls around the state to solicit feedback, proponents are in a good position.

“I fight for every vote on every bill, every time,” Cassidy said. “I work every roll call as if it’s the most important bill I’ve ever worked on. Now it’s time. It’s time to really do the head count.”

She said statehouse leaders would make decisions next week about when hearings are held. The bill will be introduced as an amendment to SB 7 in the Senate and likely follow in the House later, although that plan could change, she said.

I fight for every vote on every bill, every time,” Cassidy said. “I work every roll call as if it’s the most important bill I’ve ever worked on. Now it’s time. It’s time to really do the head count.

Similar pressure from SAM and its affiliates has worked against legalization efforts in New York and New Jersey, despite the support of those state’s governors and other key lawmakers. The struggle to push through legalization-by-legislature perhaps illustrates why the majority of adult use and medical cannabis programs to-date have resulted from voter support at the ballot box.. (Vermont’s legislature became the first to legalize cannabis last year, but not sales. Legislation to tax and regulate sales has been passed by the state Senate and is now being considered by the House).

SAM’s lobbyist in Springfield, Tim McAnarney, told Cannabis Wire that lawmakers would be inundated not just by SAM but by its coalition, which includes religious and law enforcement groups, as well as chapters of the NAACP. Not all NAACP local chapters have come out against legalization, although the group’s state president has.

“It’s an uphill fight, we know that, and we’re prepared for it,” McAnarney said.

SAM Illinois says it supports decriminalization, and criminal justice aims, but believes that legalization isn’t necessary to accomplish those goals.

He also said police have particular issues with the measure’s home grow provision for up to five plants. “Five home grown plants in a basement is creating your own homegrown black market,” McAnarney said. “The police don’t want any part of this.”

Cassidy said she knew that the home grow provision would be controversial, but she was determined to keep it because she said that when her brother-in-law had cancer, he had a greater quality of life because he used cannabis that he grew. “For me, it’s personal,” she said. “I know that he couldn’t afford medical cannabis and I know that he would have wasted away and really been miserable.”

Senator Steans said at the bill’s announcement that about 800,000 Illinoisans use cannabis regularly from the illicit market, which children can access.

“Prohibition simply does not work,” Steans said. “We want safety for our kids and the public and keeping it away from our kids. We want social justice. And we want revenue that instead of going to the illicit market comes and benefits the people in Illinois.”

Pritzker, a Democrat in one of the US’s few statehouses where the party controls both statehouse chambers, named cannabis legalization as an early priority, and has already budgeted $170 million from future sales for next year.

Cassidy said that the bill envisions two waves of business applications — giving regulators time to make changes to the program if the bill’s social equity goals are not met in the first round.

Here are the key tenets of the wide-ranging proposal, according to a summary of the bill provided by Pritzker’s office:

Possession Limits

Those 21 and older could possess up to thirty grams of cannabis flower, five grams of concentrates and 500 milligrams contained in a THC-infused product. The thirty-gram limit doesn’t apply to those growing at home.

Taxes

The bill envisions a range of taxes, which vary depending on the amount of THC in a given product. Further, the bill prescribes how tax dollars are spent.

First, a 7% tax is levied on gross receipts of a cultivator, grower or processor. Municipalities can also impose a tax up to 3% on the purchase price.

Otherwise:

  • All infused products are taxed at a level of 20% of the purchase price;
  • Cannabis with a THC level above 35% is taxed at 25% of the purchase price;
  • Cannabis with a THC level at or below 35% is taxed at 10% of the purchase price;

The state’s revenue would be allocated with 35% going to the state’s general fund; 25% to the Restoring Our Communities Fund (detailed below); 20% to fund mental health and substance abuse programs, along with local health departments; 10% to the state’s budget stabilization fund, to pay the state’s backlog of unpaid debt; 8% for a law enforcement grant program; and 2% to fund public education and awareness of cannabis-related health issues.

Social Equity

The Illinois Department of Commerce and Economic Opportunity will designate “disproportionately impacted areas,” or areas of the state with historically high rates of arrests and incarceration for cannabis-related crimes. Applicants from those areas, or those who have a past cannabis conviction or similar juvenile history, are awarded more points.  

Those who qualify as a “social equity applicant” can also access a $20 million pool of low-interest state loans.

Applicants currently operating under the state’s medical program would be first in line for adult-use licenses, paying application and business development fees, a fee based on a percentage of sales, between $100,000 and $500,000. New applicants to the program would pay application fees of $5,000 and business development fees between $10,000 and $40,000.

Further, a Restoring Our Communities board would be appointed and a program would be developed to decide on investments in communities that have been most affected by America’s drug war.  

Small and Diverse Industry

The proposal includes provisions aimed at preventing operators from having too big of a presence in the state and instead encourages a diverse set of entrepreneurs. For example, the bill includes a “craft grower” level license. That said, some of the largest cannabis companies in the US, like Cresco Labs and MedMen, have already set up shop in Illinois, and Cresco CEO Charlie Bachtell joined Pritzker’s cannabis legalization subcommittee transition team. According to the governor’s summary:

  • No person or entity shall hold any legal, equitable, or beneficial interest, directly or indirectly of more than 3 cultivation centers.
  • No person or entity shall hold any legal, equitable, or beneficial interest, directly or indirectly of more than 10 dispensing organizations.
  • No craft grower license shall be issued to any person or entity with more than 10% interest in a cultivation center.
  • No person or entity shall hold any legal, equitable, ownership, or beneficial interest, directly or indirectly, of more than one craft grower license under this article.

Expungement

Illinois would be the first state to automatically expunge certain past cannabis-related convictions. Cassidy said to Cannabis Wire, emphasizing her work around Class 4 felonies, which are entry level: “We’re going further with expungements than any other state has.”

Cannabis-related crimes from low-level possession, intent to distribute, manufacturing and delivery and possession of plants ranging from low-level misdemeanors to Class 4 felonies would be automatically expunged. Under the bill, the State Police Department would identify all past crimes that qualify and notify prosecutors and the relevant courts around the state, which would order the expungement of the crime and related law enforcement records.

The governor’s summary points out: “The automatic expungement process does not apply to individuals with misdemeanor or Class 4 felony violations that were accompanied by charges other than a qualifying offense.”

Home Grow

Those 21 and older can legally grow up to five plants for their own use as long as the grow is kept locked and out of view from those under the age of 21. They must own their residence or have permission from a landlord to do so.

Local Control

Municipalities have one year (or until January 2021) to “opt out” of providing sales through dispensaries, although other types of cannabis businesses would be permitted. Municipalities, however, could pass zoning restrictions regarding those businesses.

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