As the cannabis industry expands to more expensive and high-profile venues, social equity contenders have stayed in Chicago


When medical marijuana sales began in Illinois in 2014, cannabis companies typically chose low-profile buildings, sometimes hidden in industrial parks, to sell the controversial product.

Almost 10 years later and with recreational weed now legal in the state, cannabis has become big business. Dispensaries are moving from the isolated buildings where they started to some of the hottest retail corners in the city and suburbs. National companies bought up local dispensaries, fueling further expansion and helping to create multi-state operators worth billions.

But in the midst of all this money-making, one group is left out.

The state held lotteries last summer to award marijuana retail store licenses to “social equity seekers,” business owners from communities or families affected by the war on drugs. But a judge froze the program after several losing contestants filed lawsuits, leaving the winning contestants in limbo as the rest of the marijuana industry took off. A judge recently authorized the state to hold a remedial lottery for applicants who filed lawsuits.

“It’s just disappointing to sit on the sidelines and watch today’s operators make hundreds of millions of dollars,” said Ambrose Jackson, a former hospital administrator who won one of the equity licenses social before the program was frozen.

Social equity hopefuls keep pushing forward, sometimes renting or buying properties and completing store designs, all without being able to operate and generate revenue. But the expense of securing real estate for a cannabis-focused business, combined with the industry’s push for fancier, more expensive spaces, threatens to leave social equity contenders behind.

“All of the social equity applicants are bleeding money, and with each passing month, people like me, the ones the program is supposed to help, get hurt,” Jackson said.

Site Selection

Securing a site for a cannabis store has never been easy. Many landlords are reluctant to house cannabis retailers, which limits the spaces available. And since banks are still wary of cannabis, traditional loans aren’t an option. This represents high costs for anyone getting into cannabis, especially startups with no financial connections.

But major multi-state dispensary operators like Cresco Labs plant flags along major retail corridors like East Golf Road in Schaumburg, or at the intersection of Skokie Boulevard and Old Orchard Road in Skokie, where Curaleaf has a 15,000 square foot flagship dispensary.

“If you walk into a dark alley, you feel like you’re doing something fishy, ​​so we want to be next to a Whole Foods,” said Cresco Labs executive vice president Chima Enyia.

Progressive Treatment Solutions, which operates 11 dispensaries nationwide, including several in Illinois, has just become the latest cannabis bigwig to plan an expansion into a top-tier retail corridor.

The company started in Chicago selling medical marijuana at 6428 N. Milwaukee Ave., a small apartment building in Norwood Park on the Northwest Side, but now wants to sell its Consume brand recreational cannabis at the former Rainforest Cafe in the Clark and Ohio streets in River. North, across from McDonald’s flagship restaurant in Chicago.

“It’s a vibrant community, and I think everyone agrees if you want to have a thriving business, you have to be in a vibrant community,” PTS CEO Terry Peterson said during a controversial community meeting on May 10 in River North.

If regulators approve, the company plans to spend between $7 million and $10 million to turn the vacant building into a state-of-the-art retail space, according to Peterson, a former 17th Ward councilman and head of the Chicago Housing Authority.

Paying for the extension probably won’t be a problem for PTS. Even if the banks stay away, cannabis is such a lucrative commodity that multistate operators can still raise funds from more adventurous lenders and investors, and PTS is no exception. County records show PTS was one of the borrowers of a $56 million mortgage, secured by the Norwood Park property, from a New York-based lender. The same loan was revised in March to $106 million, an astonishing amount considering the one-story structure purchased for $750,000 in 2016.

A PTS spokesperson said the company could not disclose financial details about the company or its properties.

Other cannabis titans are looking to upgrade their spaces. Chicago-based Verano Holdings, one of the nation’s largest cannabis suppliers, last year purchased GreenGate Chicago, an independent dispensary in Rogers Park. Verano officials told a North Side community meeting in March that they wanted to relocate GreenGate, now tucked away on a side street, to a former Leona restaurant on Sheridan Road, a main thoroughfare in Rogers Park.

Jackson just wants to start. In addition to the license his company, 1937 Group, obtained to start a dispensary in the downstate, he also obtained licenses to establish a cottage-growing operation, as well as the right to transport of cannabis. His team has spent several years exploring locations, working on designs, floor plans and meeting government requirements for airtight security.

Doing that without a stable cash flow isn’t easy, Jackson said. Setting up and running a large-scale operation costs millions, so there are always bills to pay. The company pays rent on a 50,000 square foot industrial property in suburban Broadview where Jackson plans to grow and package cannabis and process oil from the plants, among other activities.

“We’ve been paying $26,000 a month for a few years now in rent since we didn’t have enough money to buy the building,” Jackson said.

Aid to industry

Big cannabis suppliers are sympathetic to the accusation that legalization has mostly benefited large, white-owned businesses, and in some cases are lending a hand. Companies such as Cresco and Chicago-based Green Thumb Industries have helped several social equity groups pass the initial qualification process or provide interest-free loans and other investments.

“It’s about creating multi-generational wealth in black and brown communities,” said Wendy Berger, GTI board member and head of investment and development firm WBS Equities. “When reviewing candidates for social equity, we wanted to make sure they could run a successful business and that their values ​​matched that goal.”

Cory Croft, a social equity candidate who completed GTI’s cannabis training program, said legalization can still prove beneficial to disadvantaged communities. His company InLabs 1 has won the right to open a dispensary in the Chicago metro area, and Croft, also chief executive of Sonder, Inc., a hotel design firm, wants to open a boutique on Chicago’s West Side in the Illinois Medical District.

“First and foremost, I believe in the medical benefits of cannabis, even though we have a recreational license, but secondly, the (Illinois Medical District) is close to North Lawndale and other West Side neighborhoods where the investment is low, so we see it as a way to create jobs and give people a chance to work.

Still, the delay means he spent around $200,000 on the effort, with no results. And he’s not sure the Illinois Medical District locations he scouted will still be available when the Social Equity Program officially launches.

In addition to providing stock loans and zero-interest loans to social equity applicants, Cresco, which operates 10 Illinois dispensaries, has also begun holding training workshops at its former Lakeview neighborhood dispensary. after moving to a new, larger store a few blocks away. , according to spokesman Jason Erkes.

“But it can’t go on forever, and there’s not much we can do,” Erkes said. “We can only hope that the licenses will be released soon.”

If the licenses are released, Josh Joseph said real estate investors could also lend a hand. He founded Chicago-based Grassroots Cannabis, which Curaleaf bought in a 2020 deal for over $800 million. He then co-founded Nashville-based cannabis company BPH Legacy Partners with former NFL players Jordan Reed and Dominique Easley, and plans to buy properties in several states, lease them to social equity operators. , helping them avoid the cost of securing real estate. . Joseph’s company has about 12 such properties under contract in Illinois and is ready to pull the trigger once the court issues the licenses.

“We have five locations in Chicago that are locked and loaded at this point,” he said.

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