When Illinois legalized recreational marijuana in 2020, state legislators sought to correct the effects of the drug war on Black and Brown communities with “the most equity-centric law in the nation.”
The government did so by issuing special “social equity” cannabis business licenses for people of color so they could reap the profits of the now billion-dollar industry. But even with those licenses, many minority entrepreneurs are struggling to get bank loans to kick start their businesses.
Cook County government took a step toward correcting that disparity by opening applications Thursday for its Cannabis Development Grant program. The county is offering $3.6 million in grants to license holders. Applications, available online, are open through June 14.
County Board President Toni Preckwinkle said grant winners will be announced later this summer.
“Running a small business is very difficult. Starting a social equity cannabis business is even more difficult,” Preckwinkle said at the announcement.
The grants available are based on the type of license: $150,000 for craft growers, $100,000 for infusers, and $75,000 for dispensaries and transporters.
The grants could be a lifeline to Black and Brown license holders. Banks are reluctant to issue loans for pot businesses because it’s still federally illegal, though the Biden Administration recently took a step to reclassify the drug. Research has shown that Black and Brown applicants are less likely to be approved for a bank loan than white applicants.
“Since the first round of craft grower licenses were awarded in August of 2021, the toughest operational hurdle to overcome has been the lack of available capital,” said Jordan Melendez, a social equity license holder from Humboldt Park and board member of the Independent Craft Growers Association.
The county expects at least 50 license holders to apply, “but it won’t shock me if we have more,” said Cook County Commissioner Bill Lowry.
The county will prioritize grants for people who have held licenses longer, and people who operate and live in “disproportionately impacted areas.”
Cook County Commissioner Tara Stamps said it is important for social equity license holders to succeed. She said they face stiff competition against multistate operators with deeper pockets.
The grants will be financed by the Cook County Equity Fund, which the county says “is dedicated to addressing historical disparities.”
The Cook County Equity Task Force recommended in 2022 that the county establish the grant program announced Thursday. The program seeks to help correct the “record of incarceration and exclusion that communities of color faced as a result of the War on Drugs,” officials said in a news release.
The county is also holding informational webinars about the grant program on May 29 and June 7.
This isn’t the first government loan program to help prop up new pot businesses. The state of Illinois has doled out millions in grants through its Business Development Fund. The state recently took applications for a second round of forgivable loans, worth $12 million, for social equity applicants.
