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First 5 recreational pot shops get state OK, but potential conflict emerges

Illinois is expected to license dozens more dispensaries in the weeks ahead.

AP

The law legalizing recreational pot has been criticized for giving a huge head start to existing medical dispensaries with deep-pocketed investors, but lawmakers said that was necessary to meet demand come Jan. 1.

But now some current pot operators could find themselves in a Catch-22, and they say Gov. J.B. Pritzker has not made it clear whether he will let them keep their advantage.

The problem comes for medical clinics located in towns or cities that choose to prohibit sales for recreational use, which the law allows. The clinics say they were told by state officials in that situation they could move to a more weed-friendly area and still obtain a license to sell both recreational and medical marijuana.

But in recent weeks state officials in the Illinois Department of Financial and Professional Regulation have told operators that clinics that choose to move won’t be given a recreational license. That means potentially no matter where they wind up they won’t be able to sell recreational pot — while other existing clinics will be able to. The apparent new interpretation of the law by the state could potentially cost some clinics thousands or even millions of dollars.

That is why it was somewhat curious that the state announced Thursday it had granted five licenses to sell recreational pot to existing medical clinics, including the 3C Compassionate Care Centers in Joliet and Naperville; The Clinic Effingham; The Clinic Mundelein and Saveo Health & Wellness in Canton.

While officials in Joliet and Canton have signaled support for recreational marijuana, the three other municipalities haven’t decided whether to allow such sales. If those places ban those clinics from selling recreational pot, then those clinics could be out of luck. (The law allows them to open a separate stand-alone recreational facility, but that was supposed to be in addition to the dual-use facilities.)

State Rep. Kelly Cassidy and state Sen. Heather Steans, both Chicago Democrats, have criticized the apparently new interpretation in a letter to Pritzker sent last week. The lawmakers said this new directive — which would also affect medical dispensaries looking to move to a more retail-friendly location — “punishes those who may be located in a municipality that opts out of adult use sales.”

“This interpretation does not benefit the patients or customers who want to purchase cannabis products, and it threatens the success of the adult use program,” Steans and Cassidy wrote, urging Pritzker and his staff to “intervene and resolve this issue.”

In a reply sent Tuesday, Pritzker acknowledged the lawmakers’ concerns but didn’t offer any explicit solutions.

“The Department will continue to monitor the situation … and my office is more than willing to discuss potential solutions with you when we have a better understanding of the scope of the problem,” wrote Pritzker, whose office said the IDFPR doesn’t know how many current medical dispensaries won’t be able to sell recreational weed.

Pritzker said the law aims to ensure existing cannabis firms “do not completely dominate the new market” before other smaller operators are allowed to jump into the market next July. He added that IDFRP’s initial implementation “must maintain this balance between early growth and social equity,” which was a key selling point of the recreational pot legislation.

Pamela Althoff — a former Republican state senator who now leads the Cannabis Business Association of Illinois, a trade group that was spun out of the Medical Cannabis Alliance of Illinois — urged Pritzker to direct the IDFPR to allow relocating medical shops to operate as dual-use dispensaries. Otherwise, Althoff said, lawmakers will have to pass a “trailer bill” during the upcoming veto session allowing them to do so.

“If we address it in a ‘trailer bill,’ that’s October [and] November, and then the ... heartburn is still there. It doesn’t give us a lot of time to relocate and go through the inspection process and meet the requirements,” she said.

Four of the dispensaries that were granted recreational licenses Thursday are owned by River North-based GTI, which also owns a 50% stake in the shop in Effingham.

Linda Mariscano, a GTI spokeswoman, said the firm looks forward to “continuing the excellent partnerships we serve across the state.”

Mariscano said the company is “actively evaluating various locations in supportive communities that are eager to have a cannabis store, tax revenue and the new job opportunities GTI will offer.” She didn’t clarify whether these would be dual-use dispensaries or standalone recreational shops.