A year or so after the Illinois social equity cannabis license rollout, many of these licenses will soon expire due to inactivity. Why? They don’t have funding.
As a result, some permit holders sell their licenses to larger companies or abandon the effort altogether, undermining the social equity program’s goals. Green Market Report questioned why most social equity businesses are not yet operational. For example, out of 504 social equity cannabis licenses issued, only 199 were operational as of August.
Why Most Illinois Social Equity Cannabis Licenses Are Still Not Operational — How Licensing Experts Can Help
Green Market Report spoke with Michael Mayes, CEO of Quantum 9, a leading cannabis business consulting firm based in Chicago, regarding the current struggles of social equity licensees in Illinois. They sought his insights.
The lack of access to traditional loans due to marijuana’s federal status compounds the challenge. Social equity applicants, often coming from marginalized communities with limited financial resources, find themselves stuck. Mayes believes this is a significant reason why so many licenses remain unused.
Establishing a cannabis business, particularly a dispensary or cultivation facility, requires millions of dollars for real estate, construction, and operation. Mayes points out that many social equity license holders struggle to raise funds. However, our cannabis M&A advisors can help businesses find creative solutions.
The Biggest Challenge: Access to Capital
“How social equity has been handled in Illinois has been a total disaster,” Mayes said. “Forcing a company to remain social equity majority-owned and managed was the stake in the heart of the program. The amount of grows and dispensaries that will likely be turned back into or decided by the state is exactly what you would expect in a failed program.”
The ownership requirement has been a major disincentive for investors. “Cannabis businesses, especially dispensaries, require significant capital. Investors are hesitant to put in $2 million or more without having majority control.” Mayes explains further, “These businesses, right off the bat, they want them to be 51% social equity applicant owned and managed. That’s tough for an investor that’s going to put in, to a dispensary, $2 million-plus into it without control.”
The cannabis industry’s lack of access to traditional loans due to federal prohibition further complicates matters. Social equity applicants, often from financially disadvantaged communities, find it difficult to secure funding. If they can’t stick it out, they sell. Contact our Illinois cannabis consultants for help if this is the situation you find yourself in!
“These individuals, by definition, are not well-financed. There’s an off-chance that they could be, but they’re few and far between,” Mayes said. “Where does that leave us? It leaves us with tons of individuals getting licenses, and a trust factor” with investors.
The Risk of Illinois Social Equity Cannabis License Expiration
Illinois adds another layer of pressure on entrepreneurs, declaring that cannabis licenses not used by a specific deadline are void. The state reclaims cannabis licenses from businesses that have not met the operational deadline. The policy has already put many social equity cannabis licenses in jeopardy, leaving many unable to launch their cannabis businesses in Illinois.
As of now, it remains unclear how many licenses will expire. Mayes predicts that without substantial changes, several will likely go unused. This leaves Illinois’ cannabis industry with fewer social equity operators than initially intended.
How Cannabis Licensing Experts Can Help
Given the complex regulatory landscape and the substantial capital required to launch a cannabis business, many social equity licensees need expert assistance. Quantum 9’s firm helps guide entrepreneurs through the licensing process. They will connect them with potential investors and provide strategic cannabis business advice to ensure long-term success.
From understanding Illinois cannabis licensing laws to developing comprehensive business plans, our Illinois cannabis licensing consultants provide essential support that could mean the difference between success and failure for many aspiring entrepreneurs.
A Better Chance to Succeed
The Illinois social equity cannabis program has faced numerous challenges, with less than half its licensees operational. A lack of funding and investor reluctance, coupled with stringent licensing requirements have created obstacles for many entrepreneurs. However, our team of Illinois cannabis licensing experts will navigate these hurdles for you. Call us. We give social equity businesses a better chance to succeed in the evolving Illinois cannabis industry.
Both clients and elected officials back Quantum 9’s cannabis licensing tips and strategies with reviews and letters of recommendation. Quantum 9’s dedicated cannabis consulting team works long hours to meet deadlines, especially during the final stages of the cannabis license application process. We make it happen for you!
We take pride in helping clients succeed! As reflected in our consistently positive results of license awards, Quantum 9 continues to excel with its cannabis license application services, client-focused strategies, and proven success. Reach out to Quantum 9 today!
