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Illinois craft cannabis growers get much needed extension

Reese Xavier wants to turn this vacant strip mall in south suburban Chicago Heights into a cannabis craft grower operation. His company is called HT23 Growers
Manuel Martinez
Reese Xavier wants to turn this vacant strip mall in south suburban Chicago Heights into a cannabis craft grower operation. His company is called HT23 Growers

Social equity craft growers get an extension to open, but financing their facilities is still a hurdle.

Illinois’ craft cannabis industry looked bleak in January.

People who’d secured licenses to grow their own products faced a looming March 1 deadline to open their businesses. The Illinois Department of Agriculture, which oversees craft grow licenses, said at the time there were no plans to extend the deadline again.

Now, the deadline for the first round of license winners is Feb. 1, 2024, and Dec. 1, 2024, for the second round. But problems remain with financing.

Think of craft cannabis like craft beer — unique products produced at a smaller scale. The state created craft grow licenses for smaller businesses, particularly run by Black and brown folks, to enter an industry that up to now has been dominated by a few major operators that have been around since the state allowed medical marijuana back in 2014. It was also seen as a way to make sure those most affected by past drug enforcement policies got a chance to make a living off of what is now a legal product.

But there have been a number of stumbling blocks, which Crystal Anderson knows something about. A nurse anesthetist by day, Anderson is working to open a craft grow facility in Kankakee and a dispensary in DeKalb. She so far hasn’t received operational approval for her grow, so the extension was a relief for her.

“It’s not that we’ve stopped working,” Anderson said. “We’re still trudging along and doing things that we have to do to stand this business up.”

In its extension notice, the agriculture department acknowledged that a lot of growers have problems getting financing — and that hasn’t changed. Anderson expects it’ll cost $4.5 million to build out the Kankakee grow facility and another $1.5 million for the DeKalb dispensary.

“We’re hoping that we get the $1.5 [million] from the state, and the balance to raise. So maybe $5 million to raise,” Anderson said. She’s working to get $1 million from Credit Union One, which is one of the banks the state contracted with to provide loans to social equity cannabis businesses as part of a match program. Anderson is also working toward a $500,000 fully forgivable loan from the Department of Commerce and Economic Opportunity. But because marijuana is still federally illegal it can be hard to find banks outside state programs that are “cannabis friendly.”

As of March 3, the department said two craft grow operations have been given the green light out of 88 awarded licenses.

Craft grow licenses are a critical part of the state’s legal recreational marijuana industry.

All craft growers in Illinois must meet the parameters to be considered a social equity business. When awarding applications the state considers matters such as whether the principal owners are from a disadvantaged area, whether they employ a majority of their workers from those areas, and whether the owners or their family members faced drug charges in the past among other criteria.

For Reese Xavier, CEO and managing partner of HT23 Growers in south suburban Chicago Heights, not much has changed since March 1. He still faces a lack of interest from investors and lack of legislation at the state level to fix structural problems.

Xavier said craft growers don’t have a loud enough voice in Springfield.

“I can tell you every hurdle I’ve been through to date, and I’m confident there will be a lot more. I can sit down and tell you about all the challenges we’ve received financially,” Xavier said. “No one has better experience and knowledge about that than the people going through it.”

Craft growers have long complained about what they call arbitrary limits in the original 2019 legislation that legalized recreational use of marijuana and set forth the parameters for how the industry will operate. They can only use 5,000 square feet of space to grow plants, with an eventual increase up to 14,000 square feet possible. But how those limits were determined and what needs to happen to increase their total canopy space remains unclear. People like Xavier say private investors won’t see the return they want under that unpredictable structure, so they move on.

Growers have also long asked for legislative fixes to issues like that. This year, more than 30 cannabis bills have been introduced addressing a range of matters — things like how close different cannabis businesses can be to each other, whether license holders can share facilities and putting a moratorium on new transporter licenses.

Illinois state Rep. La Shawn Ford, a Democrat, chairs the Cannabis Working Group in the Illinois House of Representatives. Craft growers like Xavier and others in cannabis advocacy spaces are skeptical about groups like this in part because they haven’t seen significant movement to address problems. But Ford seemed to sense the urgency.

“We’re at a critical point,” Ford said. “We have conditional license holders that could be on the brink of losing their licenses because they don’t have the money to scale up. And so now the Governor and the Speaker and the president of the Senate all realize that we have to do something that supports social equity, social equity has been hard hit by the current law. And so we have to listen to them.”

Alex Degman is an Illinois statehouse reporter for WBEZ. Follow him @Alex_Degman.

Alex Degman is a Statehouse reporter with WBEZ.