After a long delay, the Cannabis Regulation Oversight Office (CROO) today announced the official publication of the Disparity and Availability Study for adult use cannabis licenses in Illinois as required by the Cannabis Regulation and Tax Act (CRTA). Along with Governor JB Pritzker touting Illinois’ $1 billion in cannabis sales and social equity efforts in a press release yesterday, the Disparity and Availability Study boasts that Illinois “currently has the most diverse cannabis industry in the nation.”

According to the press release, “The disparity study found the CRTA successfully resulted in license ownership diversity for each license type with new licenses over the study period. Over the study period, 59% of dispensary licenses were issued to minority- or women-owned businesses (compared to 21% for the medical cannabis market). For all licenses issued by the State, that number jumps to 60%. Additionally, minority- or women-owned businesses held 63% of craft grower, 61% of infuser, and 74% of transporter licenses. Additionally, the study found nearly 84% of the State’s Direct Forgivable Loans went to minority- or women-owned businesses. According to this independent review, these demographics make Illinois the most diverse cannabis industry in the nation.”

Common and recurring themes in the report that stand out are the Racial and/or ethnic Minority- and Woman-owned Business Enterprises (M/WBEs) that continue to voice concerns and challenges for accessing capital and financial support, as well complex cannabis regulations and policies burdens. While the report finds instances of perceived discrimination, the finding state, “we could not meet the legal standard of attributing disparities to direct discrimination experienced by licensees or applicants. Barriers including complex application processes, unclear regulations, and the competitive advantage held by larger, more established companies, affect all applicants, regardless of race, ethnicity, or gender.”

The report continues with other significant contributing factors and justifications for the disparities, including timing delays with license applications, navigating complex application requirements during the COVID-19 pandemic, and litigation leading to judicial injunctions that halted state license issuance. The report states, “These insights led to the understanding that factors beyond direct or indirect discrimination may have also contributed to disparities in the cannabis industry. These challenges suggest that disparities may be rooted in systemic issues related to access to capital, regulatory complexities, and the operational difficulties of navigating the cannabis industry, rather than discrimination. This nuanced understanding calls for targeted policy interventions and support mechanisms to address the unique obstacles faced by M/WBEs in the cannabis sector.”

According to the report, compared to White men, racial and/or ethnic minorities and women are less likely to be business owners and have less access to capital through either hourly wages or bank loans. Specifically, compared to White men in the Illinois economy:

• Black, Asian, Hispanic, and women workers are less likely to own a business.
• Black loan applicants face higher bank loan denial rates.
• Black, Hispanic, additional raced26, and women workers have lower wages.

Compared to White men in cannabis-related industries:

• Black, Hispanic, additional raced, and women workers are less likely to own a business.
• Black, Asian, Hispanic, additional raced, and women workers have lower wages

The report list several recommendations to “cultivate a more inclusive and equitable industry” and recommends the following:

• Broaden availability of financing:
• Unify data systems and additional data management
• Consolidate regulatory structure
• Conduct additional disparity studies
• Strengthen industry-state collaboration

Additional administrative recommendations include:

• Allow SEAs to obtain a social equity business designation after receiving a cannabis license
• Implement a no-change affidavit for license renewals
• Implement sliding scale for licensing renewal fees based on sales
• Implement a third-party transport mandate
• Allow infusers to apply for processing licenses to process and extract cannabis products

The Disparity and Availability Study’s purpose is to collect and analyze data and will report on whether discrimination exists in the Illinois cannabis industry. If there is a finding that discrimination exists, the Disparity Study will evaluate the impact of the discrimination on the State and its residents regarding entering and participating in the State’s cannabis industry. The Disparity Study includes recommendations for reducing or eliminating any identified barriers to entry.

Quotes from Politicians

“The social equity provisions in the Cannabis Regulation and Tax Act worked at creating a diverse set of new businesses in Illinois,” said Cannabis Regulation Oversight Officer Erin Johnson. “This report is a critical first step in understanding diversity in our cannabis industry. Every week, new businesses open and the industry continues to change, evolve, and grow. We thank all those that contributed to this report and look forward to discussing the recommendations in the coming weeks and months.”

“We’re incredibly proud of our emerging cannabis industry, and we’re fully committed to making this an industry where people most affected by the War on Drugs can start their own business and thrive,” said Pritzker. “That’s why Illinois commissioned the largest, independently reviewed cannabis-focused disparity study in the nation, and the results show that our administration’s policies focused on social equity have paid off. Illinois is first in the nation when it comes to diversity in the cannabis market, and this report provides concrete steps we can take to continue supporting new businesses in a highly competitive marketplace.”

“Illinois set out to create the most equitable cannabis industry in the nation, and this study confirms we’re on the right track,” said Lt. Governor Juliana Stratton. “Numbers alone don’t tell the whole story, though — each license represents an opportunity for communities long left behind. We’re not just changing an industry; we’re changing lives.”

“Along with our partners, Nerevu has been honored to support the State in in examining Illinois’ cannabis industry,” said Nerevu Group Founder and President Reuben Cummings. “While there is more work to be done in the future, this study is essential to explain all available data when it comes to equitable cannabis policy. We are so appreciative of the open and honest information shared with my team from the regulators, industry participants, and applicants.”

“The numbers are clear: the spirit of the Cannabis Regulation and Tax Act is being achieved, with people from all backgrounds now obtaining licenses to own and operate dispensaries,” said IDFPR Secretary Mario Treto, Jr. “We look forward to additional dispensaries meeting the requirements for licensure in the future – which will further increase sales and mean additional funding for resources for all people across Illinois.”

“We are incredibly proud of the strides we’ve made within our state’s cannabis industry,” said DCEO Director Kristin Richards. “This is a testament to what can happen when you invest intentionally and implement polices from an equitable lens. Illinois is committed to continuing this work and providing opportunities to those in communities that have been historically left behind.”

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