The Chicago City Council passed its Cannabis Zoning Ordinance last week—but not before a battle royale with the Aldermanic Black Caucus.
What passed: The most notable changes from Mayor Lori Lightfoot’s original proposal, which we wrote about here, are the boundaries of the cannabis exclusion zone. The final boundaries for the downtown exclusion zone are the west side of State Street on the west, Division Street on the north, Lake Michigan to the east, and the entire Loop south to Van Buren Street. The rest of Chicago is split into seven zones, with a maximum of 7 recreational marijuana dispensaries per zone. Notably, prospective dispensaries will have to host community engagement sessions as part of their application to the Chicago Zoning Board of Appeals and residents can ban dispensaries from establishing within their precinct if more than 25% of residents sign a petition within 90 days demanding that the applying dispensary establish elsewhere.
It should come as no surprise that doing business in Chicago comes with extra complexities. The Cannabis Zoning Ordinance not only adds an additional layer to an already cumbersome state licensing scheme, it also creates tremendous uncertainty for those who are awarded a provisional license by the state (good for 180 days) and want to convert it to a dispensary in Chicago.
What else transpired: At the October 15, 2019 City Council Zoning Committee meeting, the 20-member Aldermanic Black Caucus (the “ABC”) introduced a controversial ordinance to delay all sales of recreational marijuana in Chicago until July 1, 2020. The ABC’s primary concern appears to be that when recreational sales go live on January 1, 2020, none of the operational dispensaries will be owned by a person of color. That is because the only live operators at that time will be those who are grandfathered in from the state’s fairly small (and relatively non-diverse) medical marijuana pilot program. The ABC argues that this initial exclusive control of the recreational market is an unfair advantage.
The ABC’s efforts were immediately met with pushback from Mayor Lightfoot and Sen. Toi Hutchinson, the state’s new “weed czar.” Both accused the ABC of being late to this debate and lacking an understanding of the state’s efforts and accomplishments with respect to the social-equity component of the state’s landmark legalization legislation. Both further indicated that they are not interested in any delays.
It is not clear to us if the ABC’s proposed delay was a serious proposal or simply a high-profile means to register their displeasure with some of the compromises reflected in the legalization legislation. As discussed on our recent Podcast, Illinois’s recreational cannabis market will need at least 18 months to develop and mature. Delaying that process by another six months in the City of Chicago would not help anyone intending to do business in the city, especially not future minority operators. For example, the legislation calls for current operators to incubate social equity applicants and provide loans for new licensees; those efforts could stall if the current operators are not generating revenue from the recreational market. Additionally, delaying sales may force more dispensaries into the suburbs and allow such dispensaries to recruit the best employees and establish a customer base to the detriment of future Chicago dispensaries.
The takeaway: The unity and excitement that surrounded the passage of legalization is clearly over. If you’re planning to open a pot shop in Chicago, be prepared for a no-holds-barred political brawl.
Stay tuned to our blog for more developments on Illinois’s recreational marijuana rollout in Chicago and beyond.