Becoming ‘social equity’ is nearly a must for opening an adult-use cannabis dispensary in Illinois

DCEO holds an info session for social equity applicants Nov.19 at Harry S. Truman College. One-third of the audience hopes to open their own dispensary. (Yun Hao/MEDILL)

By Yun Hao
Medill Reports

With “the status of social equity applicant” worth one-fifth of the entire 250 points of the state’s evaluation, many applicants seeking an adult-use cannabis license in Illinois are now trying to affiliate with individuals or groups that can qualify them as social equity applicants.

A social equity applicant, according to the Illinois Department of Commerce and Economic Opportunity, either has at least 51% ownership and control by one or more individuals from disproportionately impacted areas, or has more than 10 full-time employees, more than half of which are from disproportionately impacted areas.

Disproportionately impacted areas are areas affected by poverty or cannabis related arrests. Residents can go to the CannibisEquity page of DCEO to check the status of their neighborhoods.

The scales for recreational cannabis licenses selection ranking. (Data: Illinois Department of Financial & Regulation.)

As shown in the chart above, there are 10 criteria to be graded in each application, and applicants winning the highest scores will be awarded one of the up to seven adult-use cannabis dispensary licenses in each of the seven regions in Chicago.

“Security and record keeping” constitute the highest 65 points, and combined with “business plan” are 52% of the full score of 250. “Status as a social equity applicant” ranks third with 50 points, 20% of the total.

“It’s all or nothing.” Dion Trinh wrote in a text message, referring to the 50 points. Trinh is a marketing analyst who’s partnering with a friend trying to start a business in the cannabis industry. He had been spending his weekends attending all kinds of events, talking to experts and constantly jotting down contacts and notes.

For applicants like Trinh and his friend, they have to find partners from disproportionately impacted areas to reach their status of social equity and to stay competitive. The competitors come from Illinois and beyond, and the demand for partners from disproportionately impacted areas is huge.

“There are companies who are applying for 2020 that aren’t necessary here in Illinois but that wants to come to the market. They are looking for principal officers and employees who are from disproportionately impacted areas,” Shawnee Williams, recruiter and accounting executive of Illinois Equity Staffing, said.

Illinois Equity Staffing is one of the 26 state-designated training vendors for adult-use cannabis dispensaries and focuses on serving people from the South Side of Chicago, most parts of the which are counted as disproportionately impacted areas.

Apart from the regular work of training agents for adult-use cannabis dispensaries, IES helps connect people from disproportionately impacted area that want to work in the industry with the applicants seeking social equity status.

There are two kinds of positions that a person from the disproportionately impacted area can seek through IES – agent or principal officer. An agent is an employee that works for a dispensary, and the principal officer is one who can share ownership or control of a dispensary.

“Our goal, at the end of the day, is to make sure that people who are from Illinois, and from disproportionately impacted areas have a say, have a chance in entering the industry equal to anyone else.” Williams said.

But critics say not every applicant looking for social equity status will take this prescribed path.

Brothella Quick, a previous medical cannabis dispensary license applicant, said, “what they’re doing is making deals with these quote-unquote social equity people… They’ll give them $1,000 or $5,000. And then say if we win, we’re going to give you $10,000. And to a lot of people, that’s a lot of money. And they don’t have to do anything but say, ‘here, this is my address, and this is my security number.’”

Dante Hamilton, editor and publisher of a cannabis social equity newspaper who sponsors workshops for social equity applicants, says he’s seen many applicants searching for social equity partners at his events.

“I’m not even gonna tell you how they do it. But the bottom line is that they’ll go around this room and say, ‘hey, would you like to be a part of my application?’” Hamilton said.

“They’re finding people who live in the neighborhood. And they’re using them as a front. But in the background, I have… whoever big conglomerate guy who hustled me and paid me a little fee to front his application process. So I’m the guy that owns 51%, but I have no control, no management, no experience… I’m just basically being pimped.”

This concern is shared by residents of disproportionately impacted areas hoping to be a part of the cannabis industry.

They agree that the social equity program is encouraging inclusion of people from areas that were disproportionately impacted by the drug wars. But at the same time, instead of simply being invited to have their names written in someone else’s application, they want to have their own businesses, and in order to achieve that, more assistance should be given by the government, they say.

“Ownership doesn’t mean management.” Jean Edrada, activist and member of Equity First Alliance and Chicago NORML, said as a panelist in an event in West Loop last month.

Partners from the disproportionately impacted areas “might get bought out… that’s going to be more than what they could ever dream of. While the company is going to make millions for years, just like a taxi license.” Hamilton said.

“It’s a very disenchanting and disheartening, helpless feeling,” said Leslie Faye Gogins, a social equity applicant who is planning to apply for two licenses for herself.

She does not think she will win a license because she has been having some trouble filling out the 50 pages of the “security plan” of the application, which takes up 65 points of 250. But even so, she does not want to partner with people that have the money to hire professional application writers.

“I’ve thought about partnering but I don’t want it to be predatory… I don’t want to be consumed, devoured, eaten up especially by… a company that would not otherwise qualify as a social equity applicant without me.” Gogins said.

“If you’re talking about truly giving back to those who were hurt most, then you can’t have an expectation that simply because you cut the cost of the application fee, simply because you cut the cost of the fee of the license, that they can then be viable in this competitive moment.”

According to the Cannabis Regulation and Tax Act, social equity applicants can receive technical assistance for their application through DCEO. The assistance, however, is not available yet. DCEO is still in the process of making the rules.

The application process is open from Dec.10 to Jan. 2, 2020.

DCEO holds an info session for social equity applicants Nov.19 at Harry S. Truman College. One-third of the audience hopes to open their own dispensary. (Yun Hao/MEDILL)