Lightfoot wants Chicago to grow its own pot in weed co-op
The mayor says a city-owned co-op would give minorities an opportunity to buy into the most lucrative part of the recreational weed business with a “modest cash investment” or “sweat equity.”
Mayor Lori Lightfoot said Monday she is “very serious” about the city growing its own recreational marijuana to give minorities a chance to learn the business and share the wealth — a plan the governor’s office later praised.
Lightfoot said up to $15 million generated by tax-increment financing could be used as seed money for the plan to open a “cooperative cultivation center” that residents of color could “buy into” — either with a “modest cash investment” or with “sweat equity.”
She said the idea is aimed at overcoming the biggest impediment to minority ownership: access to capital.
“This is a very, very expensive business to get involved with. The basics to be a cultivator requires about a $13 million to $15 million investment. There are not a lot of people that have that, particularly in a market that a lot of banks and traditional lenders won’t touch,” she said.
“I think the only way to really crack this nut is for the city to invest its own resources to get engaged, get diverse entrepreneurs involved in the most lucrative part of the business, which is cultivation,” Lightfoot added.
“First of all, we’ve got to jump through the regulatory hoops. … Hopefully, we will get those roadblocks cleared. But I’m very serious about it.”
And where would a cash-strapped city find $15 million to open its own cultivation center?
“Well, we obviously have resources,” Lightfoot said, mentioning not just TIF money but also the Neighborhood Opportunity Fund and Catalyst Funds.
The share-the-wealth Neighborhood Opportunity Fund, created by former Mayor Rahm Emanuel, uses funds generated by developers. In order to build bigger and taller buildings in a broader downtown area, they contribute to a fund that is then used to rebuild long-ignored neighborhoods on Chicago’s South and West Sides.
Later Monday, Gov. J.B. Pritzker’s administration signaled support for Lightfoot’s bold proposal — but not for more than a year when the new law allows the Illinois Department of Agriculture, which regulates cultivation licenses, to decide whether to increase the number of large-scale cultivation centers in the state.
“The administration is excited that people are discussing new and innovative approaches to equity and we look forward to exploring those options when the application for cultivation centers begins in 2021,” Pritzker spokeswoman Jordan Abudayyeh said in a statement.
However, Krista Lisser, a spokeswoman for the Department of Agriculture, said it’s unclear whether it would be possible to issue a grow license to a public entity under the law.
“The rules are still being written on that,” Lisser said. “We really haven’t been posed with that question as of right now.”
Lightfoot first mentioned a city-owned cultivation center last week, responding to a renewed threat by the City Council’s Black Caucus chairman to delay the start date for selling legal weed in Chicago from Jan. 1 to July 1.
Lack of owners of color
Ald. Jason Ervin (28th) is furious that African Americans — who bore the brunt of the war on drugs — have “zero representation” among the owners of 11 medical marijuana dispensaries that would get a running start when recreational weed sales begin Jan. 1.
Those 11 medical marijuana dispensaries would be allowed to immediately pivot to recreational marijuana sales during the first year of legalization and have the exclusive right to open a second location until late spring, when new businesses would finally get a chance to bid.
Lightfoot’s answer to that is to have the city get into the business of growing recreational marijuana.
“One of the things that every entrepreneur that’s a small businessperson faces is access to capital. There are some things that we can do using existing city resources to help facilitate that,” she said.
“I’ve made no secret of the fact that I would like to have the opportunity for the city to create a cooperative cultivation center so we can bring a professional in, let the professional run it. But then, people will buy into the cooperative — either with modest cash investment or sweat equity — and eventually, after they learn the business from top-to-bottom, turn that over to them,” she said.
“This is a challenging issue. No question about it. This is a marketplace that was already created with medical marijuana. The vast majority of the people that are the entrepreneurs and business owners are white men. We know that. We will work as a city to make sure that we give opportunities for other people to be participants in this thriving market.”
Ervin could not be reached for comment on the mayor’s city-owned cultivation co-op idea.
Ald. Carrie Austin (34th), chair of the Committee on Contract Oversight and Equity, has called a meeting for 2 p.m. Tuesday on Ervin’s proposed six-month delay.
Austin hopes to avert a floor fight on the issue at Wednesday’s Council meeting. She could either seek to vote down Ervin’s ordinance or approve it, but not call it for a vote in the full council.
Before Austin’s move, Ervin said he would voluntarily call off the floor fight only if there is a “solution that works for our community.”
“We walked into this seeking a decent level of ownership for members of our community in a program — if you want to call it a gravy train — that has left a significant portion of the citizenry of our city out of it,” he said.