top of page
  • Writer's pictureTanya Griffin

Illinois Dispensaries: A Path to Operate or Exit

Updated: Apr 24, 2023

While the early days of pipe dream cannabis exits are arguably behind us, for those lucky groups holding one of the 185 Illinois Conditional Dispensary licenses located in one of the coveted BLS regions there are buyers ready and willing to jump in.

For IL Conditional Use winners still sitting on the sidelines and under pressure to secure capital, a location and submit their 15-36 application to the IDFPR before the 180-day extension ‘deadline to open’ comes this July 2023 decisions will need to be made on the best path forward.

Chicago, IL keyline
Chicago, IL skyline

If you are sitting on one of the coveted Illinois Conditional licenses and have not scheduled your opening there are a number of items you will need to complete to open on time. Among the most important is the IDFPR’s 15-36 application which includes many of the foundational steps to open a successful dispensary and maintain your license.

Here’s what it will take to complete…

Review, Review, Review

Like you, when we wrote the original applications for licensure way back in 2019, we made decisions about how the dispensary would operate and agreed to fulfill each mandate and carry this through operations. Between writing and submitting the application in 2019 and now so much has changed. The cannabis industry has been shaken to its core not only in Illinois but across the country. Post-COVID, as we continue to slide into a downturn economy the cost and flow of capital has been an awakening for all of us in an industry that was heretofore built on a dream and a prayer that often landed against all odds. Times are changing.

A cannabis dispensary display wall with high-tech menu's and products displays behind glass.
A modern cannabis dispensary

Vendors for everything from third-party security, alarm contractors, POS solutions, payments, banking, insurance, loyalty programs, e-commerce solutions, and more have changed pricing, features, integrations, hardware, software, and how they approach customer service. Data and analytics now share, shape, and predict how customers will shop, research, and interact with products. If you are not changing your plan from 2019 with what we have learned in the years since and redesigned your tech stack you may be hard-pressed to properly grow your business and compete.

Pending Conditional licenses have an opportunity to submit “material changes” to the IDFPR via the 15-36 application. Taking the time to fully review the original application and rethink every aspect of your plan including cutting costs where possible while taking advantage of changes in technology, location and, footprint will be the most important next step toward opening. The ability to lean on experience as you blindly recreate your business plans can make or break your survival in this progressively more efficient and competitive industry.

Secure that funding

Securing funding for a Cannabis business is more challenging than ever. High interest rates, changes in appetite to fund cannabis operations from Angels, VC's, Family Offices, and even friends and family pull back as Multi-State Operator (MSO’s) losses and dramatic drops in stock prices coupled with analogous failures outside of the cannabis industry continue to remove many of the more reliable investors that no longer buy into aggressive exit plans and returns of 30-40x’s EBITDA. With significantly fewer groups and individuals willing to invest in cannabis businesses, providing a realistic and sound business plan on the back of experienced operators is now more critical than ever if you expect to raise capital.

Location, Location, Location

Location, location, location. Making sure your square footage, floor plan, and location are dialed in and considerate of your competition is as important as ever. Bigger is not always better. With construction, FF&E, and cannabis lease costs on the rise it is important to make sure your floor plan is efficiently designed for easy customer flow and optimized sales. Whether you are purchasing or leasing your facility it is also important to plan for potential regulation changes that consider tech-driven optimized sales and changes in the industry. For example, while a “drive-thru” is not currently allowed, designing for these potential changes can save on remodeling costs in the future.

If you have not found your location yet, this should be one of the items at the top of your list. Like all retail, finding the best location available in your BLS district is one of the most important things you can do to set yourself up for long-term success. For example, if you are relying on sales from a non-cannabis border state make sure you factor in what it means when competition is at your doorstep.

Row of retail stores in Denver, CO
Busy retail area in Denver

This is not our first rodeo, when we were writing applications for Illinois in the 2014 Medical round, we identified the Metro-East St. Louis region as our number one target. With a low number of licenses available and little competition, the licenses we won in that region turned out to be among the busiest in the State which would only grow exponentially when Adult Use came online. This advantage quickly changed when Missouri became the 17th State to commence Adult Use Cannabis sales and regulated for a significantly lower excise tax, ie., 6% versus upwards of 25%. In keeping with decades of gas, cigarette, and alcohol sales flowing to Missouri cannabis can now be added to the list.

Choosing the best short and long-term location within your region is crucial. Cannabis companies will consistently pay the “cannabis tax”, a premium on all related services, and will face unique challenges when finalizing the facilities location that includes refinancing mortgages to include cannabis use, NMBY’s and lessors unwilling to lease to the industry.

Completing your 15-36 application

After you have re-secured financing, identified and secured the facility location, reviewed your original application, and revised your operation plans you are now ready to complete and submit your 15-36 application. The key in this process is to stay organized when making changes and not miss anything that will cost you in the long run. You will need to consolidate the 19 Exhibit application into one large document for a new Exhibit E. Each “Material Change” must be tracked both on the original exhibit and the new document. In this process, you will be resubmitting floor and security plans and locking down your final location.

Due to the size and complexity of the documents and the number of applications to review, the IDFPR has strict expectations regarding the organization and submission of the 15-36 application. The better organized and clear you are with changes the quicker and more cost-effective the process will be.

Water + Trees

At Water + Trees we have successfully navigated both the Medical and Adult Use Conditional licenses and operations in Illinois. Over the last decade, we have experienced every roadblock and hurdle imaginable including lucrative exits. If you are a social equity applicant and still in the process of opening your Conditional Use Cannabis license in Illinois and want to operate, we are here to help. Alternatively, if you wish to transition into a more immediate exit and are looking to sell we can connect you to viable players ready to expand their footprint in Illinois.

For serious inquiries contact

42 views0 comments


bottom of page