An equal share of legal pot: Entrepreneurs look to communities hurt by laws in the past
When Illinois begins accepting applications today from the general public to open recreational marijuana stores, Zuly Gomez and Alexander Perez hope they'll have an edge in getting licensed to open businesses in the suburbs.
Gomez has been scouting locations in Elgin, while Perez wants to open a pot shop in his native Aurora. Both are applying under a “social equity” component of legalization in the new state law that will provide opportunities to people and communities — many with large minority populations — historically affected by marijuana criminalization.
“I am really focused on community outreach and community impact,” said Gomez, 30. “I am really trying to connect with communities that have a lot of minority and a lot of presence of people that are trying to create things.”
Despite all the positives of the social equity program, said Perez, 28, there is a lot of skepticism that minorities will be adequately represented in the legal marijuana business.
“You have to have a ton of money and a ton of resources and connections,” he said. “You have to have legal representation, you have to have a team. This is a full-time job. I don't know how someone who is working two jobs or comes from a poor community is going to be doing this.”
Adults 21 and over will be able to legally consume marijuana starting Jan. 1. The Department of Financial and Professional Regulation is in charge of the licensing process, which started with “early approval” licenses issued to 30 existing medical marijuana dispensaries, including in Mundelein, Buffalo Grove and North Aurora.
The first round of general applications will be open through Jan. 2 for an additional 75 retail marijuana licenses, including 47 in the Chicago area, that will be awarded by May 1.
The social equity program is open to people who have low-level marijuana convictions, people who have immediate relatives with such convictions, and people who have lived for five of the past 10 years in “disproportionately impacted areas.”
These areas are 683 census tracts with high rates of arrest and incarceration related to marijuana, and other factors such as high poverty and unemployment. More than 2 million people live in these areas, including parts of Chicago, Elgin, Aurora, Montgomery, Waukegan, Zion, North Chicago, Hanover Park, Wheaton and Bolingbrook.
The social equity program also is open to marijuana businesses that have more than 10 full-time employees with more than half qualifying for social equity.
Approved social equity applicants get 50 points, out of a possible total 250, on their license application score and qualify for reduced fees, technical assistance, grants and low-interest loans, although details on some of this are still being worked out.
Gomez, who lives in Chicago and works as executive vice president of customer experience for the company myowndoctor, said her business will qualify under social equity because one of her three partners lives in a disproportionately impacted area in Chicago. Her own address missed qualifying by a block, she said.
“Our group is very purpose-driven,” she said, adding she wishes her mother had access to medical marijuana before her death after a leukemia diagnosis in 2012. “We have a lot of stories about how we have been impacted by cannabis because of where we came from, or because of health reasons.”
Perez is a former director of community affairs for West Aurora School District 29 and recently moved to Chicago. He qualifies for the social equity program because his stepfather and former guardian has marijuana-related convictions, he said.
“I grew up in the informal drug economy,” he said, adding that for a time he, too, dealt marijuana. Two of his four business partners also qualify under social equity, he said.
Municipalities can decide whether to allow pot shops to open within their limits. Aurora will allow up to four marijuana licenses, two for social equity applicants. Elgin is expected to approve regulations next week; Councilman Corey Dixon said he hopes the discussion will include social equity.
As for why they chose the suburbs, Gomez said she has friends in Elgin and likes the city, but other possibilities are Park Forest and Chicago. Perez said he's committed to reinvesting in his native Aurora; if that doesn't work out, the plan is to locate the business nearby, he said.
Entering the marijuana business takes a good deal of capital, Perez and Gomez said.
There is a nonrefundable $2,500 fee to apply and, if approved, a $30,000 conditional license for social equity applicants; those fees are double for everyone else. Plus, there are the costs of securing a facility, buying equipment and inventory, and everything else that comes with running a business. Applicants have at least 180 days to find a location.
“We have raised $300,000 so far, and that was hard,” Perez said.
Gomez said she and her partners are making a seven-figure investment.
Indeed, the biggest barrier for social equity applicants is access to capital, which is why a revolving loan program is being created with revenues from medical dispensaries that will sell recreational marijuana, said Toi Hutchinson, appointed by Gov. J.B. Pritzker as the state's “pot czar.”
The loan fund is designed to reach $30 million; it's now $12 million to $15 million, Hutchinson said.
The Department of Commerce and Economic Opportunity is launching a program in conjunction with the University of Illinois-Chicago John Marshall Law School to provide technical assistance for applicants, she said.
An estimated 770,000 people with marijuana-related criminal records will be eligible for expungement. The state will reinvest a portion of marijuana sales tax revenues into programs for education, mental health, job training and more for communities hit hard by marijuana criminalization, she said.
There has been criticism about little or no diversity among those who got early approval marijuana licenses. But that's simply the makeup of the medical marijuana industry, and the hope is the landscape will be much more diverse as legalization is rolled out in phases, Hutchinson said.
“The end of prohibition is a historic thing in any state it happens,” she said. “For Illinois, this is just the beginning of what legalization will look like.”
Gomez and Perez said they also want to mitigate the stigma associated with marijuana, particularly among communities of color.
“I want people to be more aware in my community that it's an option for healing,” Gomez said.
“Yes, there is the possibility of making a lot of money,” Perez said. “For me personally, this transcends the desire for that.
“I just want to do it for representation of minorities that have been represented in a negative light, in terms of cannabis, for decades.”