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Adult Use Cannabis Social Equity Applicant FAQ

This information is provided as a courtesy of the
Illinois Department of Agriculture
for informational purposes only and not for the purpose of providing legal advice.

 

General Questions and Answers

 

What is a Social Equity Applicant?

A Social Equity Applicant is a designation created by the Cannabis Regulation and Tax Act to encourage the participation of those who were disproportionately and negatively impacted by cannabis prohibition.

 

What is the benefit of being designated as a Social Equity Applicant?

Social Equity Applicants may be eligible for reduced application fees, reduced licensing fees, and loans for business development. Qualified Social Equity Applicants may receive up to 200 additional points in the Department's scoring of applications for Craft Grower, Infuser, and Transporter licenses.

 

When does one apply to be a Social Equity Applicant?

The time to apply for consideration as a Social Equity Applicant is at the time of submitting an application to be licensed as a Craft Grower, Infuser, or Transporter.

 

How does one apply to be a Social Equity Applicant?

To be designated as a Social Equity Applicant, applicants must complete the Social Equity Applicant exhibit in the application packet and submit the required proof.

 

What is the definition of a Social Equity Applicant?

The Cannabis Regulation and Tax Act defines a Social Equity Applicant as an applicant that is an Illinois resident that meets one of the following criteria:

  • The applicant has at least 51% ownership and control by one or more individuals who have resided for at least 5 of the preceding 10 years in a Disproportionately Impacted Area*; 
  • The applicant has at least 51% ownership and control by one or more individuals who:
    • Have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under the Cannabis Regulation and Tax Act**; or
    • Is a member of an impacted family***;
  • The applicant has at least 10 full-time employees and at least 51% of whom:
    • Currently reside in a Disproportionately Impacted Area; or
    • Have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under the Cannabis Regulation and Tax Act or a member of an impacted family.

* "Disproportionately Impacted Area" is defined in the Cannabis Regulation and Tax Act, and the Department of Commerce and Economic Opportunity has created a map identifying Disproprtionately Impacted Areas throughout the state, available at https://www2.illinois.gov/dceo/Pages/CannabisEquity.aspx.

** "Offenses eligible for expungement under the Cannabis Regulation and Tax Act" include possession of cannabis up to 500g or the manufacturing and delivery of up to 30g of cannabis. Public Act 101-27 and 101-593 amended several statutes, including the Criminal Identification Act and Cannabis Control Act. "Minor cannabis offenses" as defined at 20 ILCS 2630/5.2(a)(1)(G-5) are eligible for expungement and include violations of Section 4 or 5 of the Cannabis Control Act.

*** "Member of impacted family" means an individual who has a parent, legal guardian, child, spouse, or dependent, or was a dependent of an individual who, prior to the effective date of the Act, was arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under the Cannabis Regulation and Tax Act.

 

If the applicant is submitting as a Social Equity Applicant, should the applicant submit the full application fee ($5,000.00) or the reduced fee ($2,500.00)? What if the Department does not approve the applicant as a Social Equity Applicant?

Applicants for a Craft Grower, Infuser, or Transporter licenses must provide an application fee of $5,000 paid with a cashier's check or money order for each license sought at the time they submit the application, unless they are a Social Equity Applicant that meets the requirements for a waiver under Section 7-20(a)(1) and (2) of the Cannabis Regulation and Tax Act. Applicants that qualify as a Social Equity Applicant and meet the requirements of Section 7-20(a)(1) and (2) must provide an application fee of $2,500 for each license sought. If the Department receives an application from an applicant claiming a fee reduction under these provisions and determines the applicant does not qualify for a reduced application fee as a Social Equity Applicant, the Department will notify the applicant and the applicant will have 10 calendar days to either prove it is a Social Equity Applicant or to submit the remaining amount of the required application fee. All application fees are non-refundable.

 

More Specific Questions and Answers

 

For past convictions, does the conviction need to be in the State of Illinois? Can the conviction have been in a different state if I was a resident of the State of Illinois? 

The Cannabis Regulation and Tax Act only made offenses committed in Illinois eligible to be expunged. As such, offenses committed in other states cannot be used to qualify an applicant as a Social Equity Applicant.

 

What records are required to demonstrate that an applicant has arrested for, convicted of, or adjudicated for any offense that is eligible for expungement under the Act?  

To establish that an applicant has been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement pursuant to the Act, applicants should provide a record of the arrest, conviction, or adjudication from the responsible legal authority. One example of a document that may demonstrate a Principal Officer was arrested for, convicted of, or adjudicated delinquent for an offense that is eligible for expungement pursuant to the Act is a "disposition paper" from the court in the applicable jurisdiction.

 

Applicants that have had their cannabis arrest expunged in the past may: (1) provide a court record showing that an expungement was granted, (2) apply to the circuit court that granted the expungement to unseal the records of the arrest and provide a copy of those records to the Department, or (3) provide any other records that serve as evidence of the prior arrest, conviction, or adjudication. Affidavits from the accused will not be accepted without additional documentation.

 

With the requirement of providing evidence for each employee that qualifies under social equity qualifications are we required to submit payroll/employee information with our application? 

To demonstrate evidence as a Social Equity Applicant through employment, applicants must submit something more than a mere statement of qualification. Applicants should submit records that can be verified by application scorers such as, but not limited to, government and business records. Examples of such records include, but are not limited to, W-2 and/or W-4 forms, pay stubs, New Hire Reporting Forms submitted to the Illinois Department of Employment Security, payroll records, residency records, income tax forms, court records and disposition papers, utility bills, insurance forms, bank statements, pension payments, records from public assistance agencies, and school records.

 

When must employees be employed "full-time"? 

The employees being used to qualify the employer as a Social Equity Applicant must be employed full-time by the applicant as of the day the application is submitted. The work performed by the employees may or may not be not related to cannabis. Proof of employment from an entity other than the applicant cannot be used to satisfy this requirement.

 

What is the definition of a "full-time" employee? 

"Full-time employee" means an individual for whom a W-2 is issued by the applicant and is employed for a basic wage for at least 35 hours each week. "Basic Wage" means compensation for employment that is no less than the legal minimum wage of the jurisdiction in which the person is employed. Salary shall consist of all basic wage compensation not including overtime pay, bonus pay, stock options, awards or any other equity-based incentive, unreimbursed employee expenses or piecemeal rate of pay, or any form of deferred compensation.

 

For the Social Equity Applicant qualification relating to having 10 full-time employees, can the owners/operators count towards the 10 employees? 

Principals officers may count as employees if they meet the definition of full-time employee.

 

To qualify as a Social Equity Applicant based on having qualified employees, do all employees need to be Illinois residents?

No, the employees do not all need to be Illinois residents. The applicant must be an Illinois resident but there is no residency requirement for employees.

 

How do I qualify for a loan?

All questions regarding loan funds to the Department of Commerce and Economic Opportunity at CEO.AdultUseCannabis@Illinois.gov.

 

For a new business in Illinois that does not yet have employees and desires to be designated as a Social Equity Applicant based on the hiring of employees, how does that applicant demonstrate compliance? Can the applicant qualify if it commits to hiring 51% eligible individuals at a future date?

To qualify as a Social Equity Applicant based on the hiring of employees, the employees must be working full-time for the applicant as of the day the application is submitted. The employees may be engaged in work that is or is not related to cannabis.

 

Is there any flexibility to the location of the disproportionately impacted area? What if an applicant lives in a comparable geographic area with similar socioeconomic demographics?

Only those applicants residing in a Disproportionately Impacted Area, as identified by the Department of Commerce and Economic Opportunity, qualify as a Social Equity Applicant based on their residency. A map of Disproportionately Impacted Areas identified by the Department of Commerce and Economic Opportunity is available at https://www2.illinois.gov/dceo/Pages/CannabisEquity.aspx.

 

For Principal Officers who are veterans, how is active duty military time within the past 10 years treated for purposes of determining whether the Principal Officer has lived in a Disproportionately Impacted Area for 5 of the last 10 years and counts toward 51% of Social Equity ownership? 

Applicants, including veterans or active duty military personnel, may use any residence listed on tax forms submitted to the State of Illinois as their primary residence as evidence of their residence in a Disproportionately Impacted Area. Veterans or active duty military personnel will not be disadvantaged by time spent away from their primary residence due to their military service.

 

In order to qualify as a social equity applicant, does 51% of the company need to be owned by an Illinois resident?

The Cannabis Regulation and Tax Act provides that an applicant can only qualify as a "Social Equity Applicant" if: (1) an applicant applying as an individual is an Illinois resident or, (2) an applicant applying as a business entity is incorporated and doing business in Illinois as of the date the application is submitted. The Act does not require the owners of a Social Equity Applicant to be Illinois residents. If an individual or individuals are applying in their individual capacity, they must all be Illinois residents.

 

For individuals who have resided in Disproportionately Impacted Areas, but were homeless within the 5 years of the last 10 years, what considerations are given to allow for individuals with this type of experience to show habitation within a Disproportionately Impacted Area?

An applicant who resided in a Disproportionately Impacted Area but was homeless for some or all of the relevant time period may provide a signed Homeless Status Verification form provided by the Illinois Secretary of State (available here: https://www.cyberdriveillinois.com/publications/pdf_publications/dsd_a230.pdf) to show they resided in a Disproportionately Impacted Area during that period of time.

 

How does one demonstrate, in terms of documentary evidence, a familial relationship to qualify as a Social Equity Applicant?

Applicants should submit records that can be verified by application scorers such as, but not limited to, government or court records. Examples of records could include, but are not limited to, income tax forms, court records, insurance forms, bank statements, pension payments, records from public assistance agencies, school records, and birth certificates.

 

Can you provide a complete list of "offenses eligible for expungement under this Act"?

Offenses identified in Sections 4 and 5 of the Illinois Cannabis Control Act (720 ILCS 550) that were classified as Class 4 felonies or misdemeanors at the time of the offense are eligible for expungement. None of these convictions are expungable if the offense was associated with a violent crime (as defined in 725 ILCS 120/3) or a penalty enhancement for selling to a person under the age of 18 if the seller was over the age of 18. Applicants should review how their offense was charged as to verify their eligibility for expungement. The Criminal Identification Act (20 ILCS 2630/5.2) governs expungement and has the full text of "minor cannabis offenses" eligible for expungment.