HB5457 102ND GENERAL ASSEMBLY

LRB102 25253 CPF 34526 b

102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB5457

Introduced 1/31/2022, by Rep. La Shawn K. Ford

SYNOPSIS AS INTRODUCED:

410 ILCS 130/103 new
410 ILCS 705/5-10
410 ILCS 705/5-22 new
410 ILCS 705/5-23 new
410 ILCS 705/7-15
410 ILCS 705/15-5
410 ILCS 705/15-25
410 ILCS 130/100 rep.
410 ILCS 705/5-15 rep.
410 ILCS 705/5-25 rep.
410 ILCS 705/5-30 rep.
410 ILCS 705/5-45 rep.

Amends the Compassionate Use of Medical Cannabis Program Act. Provides that the Department of Agriculture shall follow specified requirements of the Cannabis Regulation and Tax Act regarding the administration of cultivation center agent identification cards, and the Department of Financial and Professional Regulation shall follow specified requirements of that Act regarding the administration of dispensing organization agent identification cards. Repeals provisions regarding cultivation center agent identification cards. Amends the Cannabis Regulation and Tax Act. Provides that the Department of Agriculture shall issue dispensing organization licenses and agent identification cards (rather than the Department of Financial and Professional Regulation). Provides that the Department of Agriculture shall issue agent identification cards under the Act via an online application portal. Contains provisions requiring background checks through the Illinois State Police for agent identification cards. Contains other provisions. Repeals provisions regarding Department of Public Health health warnings, the Department of Human Services, the Illinois Cannabis Regulation Oversight Officer, and other provisions. Effective immediately.

A BILL FOR

AN ACT concerning health.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. Findings. The General Assembly finds that:

(1) The process of acquiring a license or identification card under the Cannabis Regulation and Tax Act offers a confusing framework that requires an applicant to undergo a criminal history record check for prospective principal officers, board members, and agents by submitting the applicant's fingerprints to the Illinois State Police as prescribed by the relevant department. This process is controlled by the Illinois Department of Financial and Professional Regulation and the Illinois Department of Agriculture. The former offers licenses via a manual licensing platform, while the latter offers an online electronic application platform.

(2) This scenario has since led to exorbitant expense for licensees seeking to recruit agents who conform to the background requirements.

(3) As such, the current licensing criteria are cumbersome, leading to a narrowing of the pool of candidates for selection. Further, trained candidates are inevitably denied entry into the industry subject to strict background checks and inconsistent criminal records requirements, which are not provided for in the pre-badging criteria.

(4) The current illegal framework is discriminatory and violates the spirit of the Fourteenth Amendment of the United States Constitution. It fails to offer an equitable, procedurally fair, and just process for Black and Brown applicants who are seeking to take up agent roles in dispensing organizations, cultivation centers, transporting organizations, and infuser organizations.

Section 10. The Compassionate Use of Medical Cannabis Program Act is amended by adding Section 103 as follows:

(410 ILCS 130/103 new)

Sec. 103. Cultivation center agent identification cards; dispensing organization agent identification cards.

(a) The Department of Agriculture shall follow the requirements set forth in Section 20-35 of the Cannabis Regulation and Tax Act regarding the administration of cultivation center agent identification cards under this Act.

(b) The Department of Financial and Professional Regulation shall follow the requirements set forth in Section 15-40 of the Cannabis Regulation and Tax Act regarding the administration of dispensing organization agent identification cards under this Act.

Section 15. The Cannabis Regulation and Tax Act is amended by changing Sections 5-10, 7-15, 15-5, and 15-25 and by adding Sections 5-22 and 5-23 as follows:

(410 ILCS 705/5-10)

Sec. 5-10. Department of Agriculture. The Department of Agriculture shall administer and enforce provisions of this Act relating to the oversight and registration of dispensing organizations, cultivation centers, craft growers, infuser organizations, and transporting organizations and agents, including the issuance of identification cards and establishing limits on potency or serving size for cannabis or cannabis products. The Department of Agriculture may suspend or revoke the license of, or impose other penalties upon dispensing organizations, cultivation centers, craft growers, infuser organizations, transporting organizations, and their principal officers, Agents-in-Charge, and agents for violations of this Act and any rules adopted under this Act.

(Source: P.A. 101-27, eff. 6-25-19.)

(410 ILCS 705/5-22 new)

Sec. 5-22. Licensing and identification cards.

(a) The Department of Agriculture shall issue dispensing organization agent identification cards, cultivation center agent identification cards, craft grower agent identification cards, and infuser organization agent identification cards under this Act via an online application portal.

(b) A State agency that issues a license under this Act shall offer pre-badging approval process guidelines to candidates for the license, pending the completion of the background checks by the Illinois State Police required under Section 5-23.

(c) A State agency that issues a license under this Act shall offer an expedited licensing process upon payment of a required licensing fee.

(410 ILCS 705/5-23 new)

Sec. 5-23. Background checks.

(a) The Department of Agriculture, through the Illinois State Police, regarding dispensing organizations, cultivation centers, infuser organization, and craft growers, shall carry out initial background checks for all prospective principal officers, board members, and agents of a cannabis business establishment prior to licensing, including the issuance of identification cards.

(b) The Illinois State Police shall charge a prescribed fee for an expedited criminal history record check, which shall be deposited into the State Police Services Fund and shall not exceed the actual cost of the State and national criminal history record check.

(c) The Department of Agriculture shall provide information on background check requirements on the online application portal for the consideration of applicants prior to the commencement of the application's processing. For the purposes of this subsection, the Illinois State Police shall flag as unqualified an applicant with a criminal conviction of murder, sexual harassment, child molestation, rape, or robbery with violence.

(d) The Department of Agriculture shall ensure a fair and just background check, including an exemption from strict background check requirements for applicants with no prior felony records.

(e) The Department of Agriculture shall review background check requirements to eliminate all discriminatory criteria that may inevitably deny certain citizens access to the application for licensing and agent identification cards.

(f) The Department of Agriculture shall provide a process for appeal of an application denial based on erroneous or discriminatory background consideration.

(g) All applicants for licensure under this Act with criminal convictions shall be subject to the provisions of Sections 2105-131, 2105-135, and 2105-205 of the Department of Professional Regulation Law of the Civil Administrative Code of Illinois subject to any controlling exemption.

(410 ILCS 705/7-15)

Sec. 7-15. Loans and grants to Social Equity Applicants.

(a) The Department of Commerce and Economic Opportunity shall establish grant and loan programs, subject to appropriations from the Cannabis Business Development Fund, for the purposes of providing financial assistance, loans, grants, and technical assistance to Social Equity Applicants and ancillary service providers.

(b) The Department of Commerce and Economic Opportunity has the power to:

(1) provide Cannabis Social Equity loans and grants from appropriations from the Cannabis Business Development Fund to assist Qualified Social Equity Applicants and ancillary service providers in gaining entry to, and successfully operating in, the State's regulated cannabis marketplace;

(2) enter into agreements that set forth terms and conditions of the financial assistance, accept funds or grants, and engage in cooperation with private entities and agencies of State or local government to carry out the purposes of this Section;

(3) fix, determine, charge, and collect any premiums, fees, charges, costs and expenses, including application fees, commitment fees, program fees, financing charges, or publication fees in connection with its activities under this Section;

(4) coordinate assistance under these loan programs with activities of the Illinois Department of Financial and Professional Regulation, the Illinois Department of Agriculture, and other agencies as needed to maximize the effectiveness and efficiency of this Act;

(5) provide staff, administration, and related support required to administer this Section;

(6) take whatever actions are necessary or appropriate to protect the State's interest in the event of bankruptcy, default, foreclosure, or noncompliance with the terms and conditions of financial assistance provided under this Section, including the ability to recapture funds if the recipient is found to be noncompliant with the terms and conditions of the financial assistance agreement;

(7) establish application, notification, contract, and other forms, procedures, or rules deemed necessary and appropriate; and

(8) utilize vendors or contract work to carry out the purposes of this Act.

(c) Loans made under this Section:

(1) shall only be made if, in the Department's judgment, the project furthers the goals set forth in this Act; and

(2) shall be in such principal amount and form and contain such terms and provisions with respect to security, insurance, reporting, delinquency charges, default remedies, and other matters as the Department shall determine appropriate to protect the public interest and to be consistent with the purposes of this Section. The terms and provisions may be less than required for similar loans not covered by this Section.

(d) Grants made under this Section shall be awarded on a competitive and annual basis under the Grant Accountability and Transparency Act. Grants made under this Section shall further and promote the goals of this Act, including promotion of Social Equity Applicants, ancillary service providers, job training and workforce development, and technical assistance to Social Equity Applicants.

(e) Beginning January 1, 2021 and each year thereafter, the Department shall annually report to the Governor and the General Assembly on the outcomes and effectiveness of this Section that shall include the following:

(1) the number of persons or businesses receiving financial assistance under this Section;

(2) the amount in financial assistance awarded in the aggregate, in addition to the amount of loans made that are outstanding and the amount of grants awarded;

(3) the location of the project engaged in by the person or business; and

(4) if applicable, the number of new jobs and other forms of economic output created as a result of the financial assistance.

(f) The Department of Commerce and Economic Opportunity shall include engagement with individuals with limited English proficiency as part of its outreach provided or targeted to attract and support Social Equity Applicants and ancillary service providers.

In this Section, "ancillary service provider" means a nonlicensed business entity that provides operational support for a cannabis business establishment without having direct contact with cannabis.

(Source: P.A. 101-27, eff. 6-25-19; 101-593, eff. 12-4-19.)

(410 ILCS 705/15-5)

Sec. 15-5. Authority.

(a) In this Article, "Department" means the Department of Agriculture Financial and Professional Regulation.

(b) It is the duty of the Department to administer and enforce the provisions of this Act relating to the licensure and oversight of dispensing organizations and dispensing organization agents unless otherwise provided in this Act.

(c) No person shall operate a dispensing organization for the purpose of serving purchasers of cannabis or cannabis products without a license issued under this Article by the Department. No person shall be an officer, director, manager, or employee of a dispensing organization without having been issued a dispensing organization agent card by the Department.

(d) Subject to the provisions of this Act, the Department may exercise the following powers and duties:

(1) Prescribe forms to be issued for the administration and enforcement of this Article.

(2) Examine, inspect, and investigate the premises, operations, and records of dispensing organization applicants and licensees.

(3) Conduct investigations of possible violations of this Act pertaining to dispensing organizations and dispensing organization agents.

(4) Conduct hearings on proceedings to refuse to issue or renew licenses or to revoke, suspend, place on probation, reprimand, or otherwise discipline a license under this Article or take other nondisciplinary action.

(5) Adopt rules required for the administration of this Article.

(Source: P.A. 101-27, eff. 6-25-19.)

(410 ILCS 705/15-25)

Sec. 15-25. Awarding of Conditional Adult Use Dispensing Organization Licenses prior to January 1, 2021.

(a) The Department shall issue up to 75 Conditional Adult Use Dispensing Organization Licenses before May 1, 2020.

(b) The Department shall make the application for a Conditional Adult Use Dispensing Organization License available no later than October 1, 2019 and shall accept applications no later than January 1, 2020.

(c) To ensure the geographic dispersion of Conditional Adult Use Dispensing Organization License holders, the following number of licenses shall be awarded in each BLS Region as determined by each region's percentage of the State's population:

(1) Bloomington: 1

(2) Cape Girardeau: 1

(3) Carbondale-Marion: 1

(4) Champaign-Urbana: 1

(5) Chicago-Naperville-Elgin: 47

(6) Danville: 1

(7) Davenport-Moline-Rock Island: 1

(8) Decatur: 1

(9) Kankakee: 1

(10) Peoria: 3

(11) Rockford: 2

(12) St. Louis: 4

(13) Springfield: 1

(14) Northwest Illinois nonmetropolitan: 3

(15) West Central Illinois nonmetropolitan: 3

(16) East Central Illinois nonmetropolitan: 2

(17) South Illinois nonmetropolitan: 2

(d) An applicant seeking issuance of a Conditional Adult Use Dispensing Organization License shall submit an application on forms provided by the Department. An applicant must meet the following requirements:

(1) Payment of a nonrefundable application fee of $5,000 for each license for which the applicant is applying, which shall be deposited into the Cannabis Regulation Fund;

(2) Certification that the applicant will comply with the requirements contained in this Act;

(3) The legal name of the proposed dispensing organization;

(4) A statement that the dispensing organization agrees to respond to the Department's supplemental requests for information;

(5) From each principal officer, a statement indicating whether that person:

(A) has previously held or currently holds an ownership interest in a cannabis business establishment in Illinois; or

(B) has held an ownership interest in a dispensing organization or its equivalent in another state or territory of the United States that had the dispensing organization registration or license suspended, revoked, placed on probationary status, or subjected to other disciplinary action;

(6) Disclosure of whether any principal officer has ever filed for bankruptcy or defaulted on spousal support or child support obligation;

(7) A resume for each principal officer, including whether that person has an academic degree, certification, or relevant experience with a cannabis business establishment or in a related industry;

(8) A description of the training and education that will be provided to dispensing organization agents;

(9) A copy of the proposed operating bylaws;

(10) A copy of the proposed business plan that complies with the requirements in this Act, including, at a minimum, the following:

(A) A description of services to be offered; and

(B) A description of the process of dispensing cannabis;

(11) A copy of the proposed security plan that complies with the requirements in this Article, including:

(A) The process or controls that will be implemented to monitor the dispensary, secure the premises, agents, and currency, and prevent the diversion, theft, or loss of cannabis; and

(B) The process to ensure that access to the restricted access areas is restricted to, registered agents, service professionals, transporting organization agents, Department inspectors, and security personnel;

(12) A proposed inventory control plan that complies with this Section;

(13) A proposed floor plan, a square footage estimate, and a description of proposed security devices, including, without limitation, cameras, motion detectors, servers, video storage capabilities, and alarm service providers;

(14) The name, address, social security number, and date of birth of each principal officer and board member of the dispensing organization; each of those individuals shall be at least 21 years of age;

(15) Evidence of the applicant's status as a Social Equity Applicant, if applicable, and whether a Social Equity Applicant plans to apply for a loan or grant issued by the Department of Commerce and Economic Opportunity;

(16) The address, telephone number, and email address of the applicant's principal place of business, if applicable. A post office box is not permitted;

(17) Written summaries of any information regarding instances in which a business or not-for-profit that a prospective board member previously managed or served on were fined or censured, or any instances in which a business or not-for-profit that a prospective board member previously managed or served on had its registration suspended or revoked in any administrative or judicial proceeding;

(18) A plan for community engagement;

(19) Procedures to ensure accurate recordkeeping and security measures that are in accordance with this Article and Department rules;

(20) The estimated volume of cannabis it plans to store at the dispensary;

(21) A description of the features that will provide accessibility to purchasers as required by the Americans with Disabilities Act;

(22) A detailed description of air treatment systems that will be installed to reduce odors;

(23) A reasonable assurance that the issuance of a license will not have a detrimental impact on the community in which the applicant wishes to locate;

(24) The dated signature of each principal officer;

(25) A description of the enclosed, locked facility where cannabis will be stored by the dispensing organization;

(26) Signed statements from each dispensing organization agent stating that he or she will not divert cannabis;

(27) The number of licenses it is applying for in each BLS Region;

(28) A diversity plan that includes a narrative of at least 2,500 words that establishes a goal of diversity in ownership, management, employment, and contracting to ensure that diverse participants and groups are afforded equality of opportunity;

(29) A contract with a private security contractor agency that is licensed under Section 10-5 of the Private Detective, Private Alarm, Private Security, Fingerprint Vendor, and Locksmith Act of 2004 in order for the dispensary to have adequate security at its facility; and

(30) Other information deemed necessary by the Illinois Cannabis Regulation Oversight Officer to conduct the disparity and availability study referenced in subsection (e) of Section 5-45.

(e) (Blank). An applicant who receives a Conditional Adult Use Dispensing Organization License under this Section has 180 days from the date of award to identify a physical location for the dispensing organization retail storefront. The applicant shall provide evidence that the location is not within 1,500 feet of an existing dispensing organization, unless the applicant is a Social Equity Applicant or Social Equity Justice Involved Applicant located or seeking to locate within 1,500 feet of a dispensing organization licensed under Section 15-15 or Section 15-20. If an applicant is unable to find a suitable physical address in the opinion of the Department within 180 days of the issuance of the Conditional Adult Use Dispensing Organization License, the Department may extend the period for finding a physical address another 180 days if the Conditional Adult Use Dispensing Organization License holder demonstrates concrete attempts to secure a location and a hardship. If the Department denies the extension or the Conditional Adult Use Dispensing Organization License holder is unable to find a location or become operational within 360 days of being awarded a conditional license, the Department shall rescind the conditional license and award it to the next highest scoring applicant in the BLS Region for which the license was assigned, provided the applicant receiving the license: (i) confirms a continued interest in operating a dispensing organization; (ii) can provide evidence that the applicant continues to meet all requirements for holding a Conditional Adult Use Dispensing Organization License set forth in this Act; and (iii) has not otherwise become ineligible to be awarded a dispensing organization license. If the new awardee is unable to accept the Conditional Adult Use Dispensing Organization License, the Department shall award the Conditional Adult Use Dispensing Organization License to the next highest scoring applicant in the same manner. The new awardee shall be subject to the same required deadlines as provided in this subsection.

(e-5) (Blank). If, within 180 days of being awarded a Conditional Adult Use Dispensing Organization License, a dispensing organization is unable to find a location within the BLS Region in which it was awarded a Conditional Adult Use Dispensing Organization License because no jurisdiction within the BLS Region allows for the operation of an Adult Use Dispensing Organization, the Department of Financial and Professional Regulation may authorize the Conditional Adult Use Dispensing Organization License holder to transfer its license to a BLS Region specified by the Department.

(e-10) The Department shall verify that the physical location of an applicant's dispensing organization retail storefront is suitable for public access, its layout promotes the safe dispensing of cannabis, and its location is sufficient in size, power allocation, lighting, parking, handicapped accessible parking spaces, accessible entry and exits as required by the federal Americans with Disabilities Act of 1990, product handling, and storage. The applicant shall also provide a statement of reasonable assurance that the issuance of a license will not have a detrimental impact on the community. The applicant shall also provide evidence that the location is not within 1,500 feet of an existing dispensing organization.

(e-15) A Conditional Adult Use Dispensing Organization may transfer or sell its Conditional Adult Use Dispensing Organization License with prior Department approval. The approval may be withheld if the person or entity to whom the license is being transferred does not commit to the same or a similar community engagement plan provided as part of the Conditional Adult Use Dispensing Organization's application under paragraph (18) of subsection (d), and such transferee's license shall be conditional upon that commitment. A request to transfer or sell the Conditional Adult Use Dispensing Organization License must be on application forms provided by the Department. A request for approval to sell a dispensing organization must comply with the following:

(1) New application materials shall comply with this Act and any rules adopted under this Act.

(2) Application materials shall include a change of ownership fee of $5,000, to be deposited into the Cannabis Regulation Fund.

(3) The application materials shall provide proof that the transfer of ownership will not have the effect of granting any owner or principal officer direct or indirect ownership or control of more than 10 Adult Use Adult Use Dispensing Organization Licenses or Conditional Adult Use Dispensing Organization Licenses.

(4) Each proposed new principal officer shall complete the proposed new principal officer application.

(5) If the Department approves the application materials and proposed new principal officer applications, it will perform an inspection before approving the sale and issuing the new Adult Use Dispensing Organization License or Conditional Adult Use Dispensing Organization License.

(6) If the sale of the Adult Use Dispensing Organization License or Conditional Adult Use Dispensing Organization License is approved, the Department shall issue a new license number and certificate to the new dispensing organization. The transfer of a dispensing organization's license to a Social Equity Applicant is subject to all other provisions of this Act, relevant provisions of the Compassionate Use of Medical Cannabis Program Act, and administrative rules regarding the transfer of licenses.

(e-20) If a Qualified Social Equity Applicant seeks to transfer, sell, or grant a cannabis business establishment license within 5 years after it was issued to a person or entity who does not qualify as a Social Equity Applicant, the transfer agreement shall require the new license holder to transfer into the Cannabis Business Development Fund an amount equal to:

(1) any fees that were waived by any State agency based upon the applicant's status as a Social Equity Applicant, if applicable;

(2) any outstanding amount owed by the Qualified Social Equity Applicant on a loan through the Cannabis Business Development Fund, if applicable; and

(3) the full amount of any grants that the Qualified Social Equity Applicant received from the Department of Commerce and Economic Opportunity, if applicable.

(f) A dispensing organization that is awarded a Conditional Adult Use Dispensing Organization License pursuant to the criteria in Section 15-30 shall not purchase, possess, sell, or dispense cannabis or cannabis-infused products until the person has received an Adult Use Dispensing Organization License issued by the Department pursuant to Section 15-36 of this Act.

(g) The Department shall conduct a background check of the prospective organization agents in order to carry out this Article. The Illinois State Police shall charge the applicant a fee for conducting the criminal history record check, which shall be deposited into the State Police Services Fund and shall not exceed the actual cost of the record check. Each person applying as a dispensing organization agent shall submit a full set of fingerprints to the Illinois State Police for the purpose of obtaining a State and federal criminal records check. These fingerprints shall be checked against the fingerprint records now and hereafter, to the extent allowed by law, filed in the Illinois State Police and Federal Bureau of Identification criminal history records databases. The Illinois State Police shall furnish, following positive identification, all Illinois conviction information to the Department.

(Source: P.A. 101-27, eff. 6-25-19; 101-593, eff. 12-4-19; 102-98, eff. 7-15-21; 102-538, eff. 8-20-21; revised 10-13-21.)

(410 ILCS 130/100 rep.)

Section 20. The Compassionate Use of Medical Cannabis Program Act is amended by repealing Section 100.

(410 ILCS 705/5-15 rep.)

(410 ILCS 705/5-25 rep.)

(410 ILCS 705/5-30 rep.)

(410 ILCS 705/5-45 rep.)

Section 25. The Cannabis Regulation and Tax Act is amended by repealing Sections 5-15, 5-25, 5-30, and 5-45.

Section 99. Effective date. This Act takes effect upon becoming law.