Some pot license winners are now looking to sell to the highest bidder
Applicants waited over a year for the chance to enter Illinois’ burgeoning weed industry.
But now that they’ve secured lucrative licenses to open marijuana dispensaries, craft farms, or other related businesses, some could sell the licenses before they even open – potentially raising millions in the process.
As the state’s troubled pot licensing process draws to a close, weed companies and other cash-rich buyers are now expected to seek out the new licenses – many of which are expected to be awarded to applicants for social equity, a designation created to stimulate diversity in the white lily industry.
Rickey Hendon, a former state senator who won a dispensary license in the lottery last week, acknowledged that he and other companies are now considering a slew of proposals for sale to owners with deeper pockets. A court order in an ongoing lawsuit, however, has blocked the formal issuance of pottery store permits for the time being.
“Of course some of the small businesses are listening to all kinds of offers,” said Hendon, who became the de facto spokesperson for social equity contenders after being excluded from the initial licensing process there. is one year old. “I listen to all kinds of offers.
Hendon, who has said he is simply exploring his options, believes a license could fetch between $ 3 million and $ 15 million, depending on which area of the state it allows a buyer to locate.
An industry source, however, estimated that each of the 185 new pottery workshop permits is probably worth much less, between $ 1 million and $ 3 million. The source set the going rate at $ 4-5 million for each of 40 new craft cultivation licenses, which were announced last month along with other permissions to infuse and transport cannabis products.
But critics say the potential massive sale goes against the spirit of the Legalization Act and the recent trailer bill that Hendon helped draft, both of which have given themselves a lot of attention. wrong to give people of color ownership in the highly profitable industry. In addition, there are concerns that predatory forces will try to take advantage of social equity companies that are trying to make a quick profit.
Edie Moore, a staunch supporter of industry diversification and executive director of Chicago NORML, a marijuana advocacy group, couldn’t restrain his frustrations at the prospect of social equity companies now dropping licenses both in the state have fought to get to them.
“I’m not sorry for people who want to get a salary. But I thought they got into this business to be in this business, not just to make a quick buck, ”said Moore, who helped draft the latest pot law and has already obtained a dispensary permit.
“This is what we were fighting for,” she added. “For people to create generational wealth by owning, building and creating something within their communities, not giving it back to white boys.” “
The current owners of the pottery shops are almost all exclusively white, and a similar binge eating for these licenses is already underway as multibillion-dollar cannabis companies have continued to buy crazies in Illinois.
Moore is concerned that multi-state fundraisers will inevitably buy out social equity licenses and “win again,” a particularly tricky prospect given his background. Previously, she had sold dispensary and medical marijuana cultivation licenses to Arizona-based 4Front Ventures – a move she said was prompted by conditions created by the program’s overly careful management of the program. former Governor Bruce Rauner years before recreational pot legalization in 2020.
The Recreation Act, however, contains few restrictions on the sale of permits. He only says that the craft cultivation licenses can only be sold after Dec. 21, according to Charity Greene, spokesperson for Governor JB Pritzker’s office. There is no similar language on the sale of dispensary, infusion, or transport licenses, although all cannabis license transfers require regulatory approval.
If a social equity claimant sells a license to a business that does not qualify, the buyer must reimburse any waived fees and any amounts owed for government loans or grants.
For its part, the influential Cannabis Business Association of Illinois is currently planning an event where new entrants to the industry can meet existing players, creating an environment conducive to making deals and selling licenses.
Former State Senator Pam Althoff, the group’s executive director, noted that many of the new licensees are now in dire straits as they have lost investors and important expertise in their teams pending the award of new licenses.
“There have been huge consequences for a lot of these candidates,” Althoff said. “And in many cases, they decided it was in their best interests to try and license it, knowing that they weren’t going to be very successful in the future.”
While the event is not specifically designed to connect new licensees with buyers, “what emerges from these conversations is their personal business,” she noted.
“We are really committed to the challenge of making the industry diverse, and we want people to be successful,” she said. “But if they can’t, we certainly want to be able to provide them with enough resources and advice on how to move forward.”
But there are concerns that powerful jackpot companies will take advantage of those who try to offload licenses. Lawyer Akele Parnell, who recently obtained dispensary and craft culture permits, said he had no problem with other companies returning licenses – “as long as it’s not predatory.”
“I don’t want people selling for far below market value,” he said.