Illinois regulators have come out with proposed requirements for opening medical marijuana grow centers and dispensaries — and they come with a steep price tag that advocates say could be costly for consumers.
For dispensaries to sell cannabis, state officials proposed a $5,000 nonrefundable application fee, proof of $400,000 in assets, a $30,000 permit fee and a yearly permit renewal fee of $25,000.
For cultivation centers, the Department of Agriculture proposed a $25,000 nonrefundable application fee, $250,000 in liquid assets, payment of $200,000 upon approval of a permit and a renewal fee of $100,000.
The costs are sure to eliminate a lot of potential entrepreneurs, said Joseph Friedman, a pharmacist from Lincolnshire who hopes to open a dispensary.
“Probably 50 percent of the wannabes are now out,” he said. “This is going to bring out just the serious players who are well-capitalized and well-credentialed.”
The 71 pages of proposed regulations for dispensaries, released Friday, are daunting even for established businesses and will likely require close to six figures in additional fees to attorneys, auditors and engineers, said Nick Williams. He is general counsel for Normal, Ill.-based HW Holdings, which owns a chain of eyeglass stores throughout Illinois and is looking to get into the medical marijuana business.
Williams’ firm favors strict regulations to establish a reputable business, and he anticipates it may take a year of losses before dispensaries turn a profit.
“A lot of people are going to say, ‘My good Lord, this is a lot to come to the table with,'” he said.
Chris Lindsey, legislative analyst for the nonprofit advocacy group Marijuana Policy Project, warned that those expenses will be passed on to consumers.
“The costs appear excessive for cultivation centers,” he said. “I would hope regulators will consider what negative impacts these fees would have.”
Dispensary applicants will be scored on a long list of requirements for their business and security plans, including fingerprinting and criminal background checks on owners, operators and patients, and 24-hour video surveillance that must be viewable online by state police and regulators.
A new Illinois law took effect this year to allow medical marijuana for patients diagnosed with any of about three dozen specific medical conditions. But because of the lengthy regulatory process, industry watchers do not expect marijuana to be available to the public until sometime in 2015.
The law allows for 22 grow centers and 60 dispensaries spread around the state. Proposed rules call for 13 dispensaries in Chicago; 11 in suburban Cook County; three each in DuPage, Kane, Lake and Will counties; one each in McHenry and DeKalb counties; and one shared between Grundy and Kendall counties.
The rest of the state would get one dispensary per Illinois State Police district.