 So all right, so this panel is about the economics of cannabis in Illinois I'm sure a lot of people are very interested in the bill that was just introduced So we're gonna get to that later because I want you guys to stick around for the whole panel So let's start with the current program. We've got a medical marijuana program here. It's still a pilot program technically In fairly slow to develop compared to some other states can can panels talk a little bit about What this program is look like to date? Yeah, so I'm just to kind of give a snapshot of the numbers we're at about 62,000 patients right now and that has gone up even in the past two or three months since February when the state rolled out their new Opioid pilot program which allows anyone that is prescribed an opioid to access medical cannabis The other big things that they did back in February were that they eliminated the background check and fingerprint requirements for patients Which made things a lot easier and quicker for patients to get their medical cards They've also started granting provisional cards, which if you apply you can get your card immediately and download it Sort of like you would a plane take it on your phone and get into a dispensary that way instead of waiting What was taking up to three months for the state to process your application? So, you know all over the state the numbers are up as far as foot traffic into the dispensaries And I think we'll see that the main numbers haven't been released yet They usually release them at the beginning of the month, so I think we'll see that going up, you know kind of exponentially You know the market in Illinois for the medical side has made great strides It started out I think with a very rough rollout and some uncertainty as we were changing governors right at that particular point in time I don't think it's any shock or secret to say that our prior governor was no fan of this industry and Probably well not probably did a very good job of standing in the way of really giving the program a chance to grow I think in the way that most people anticipated that it would grow And the hope is is that now that governor Pritzker is in charge that he's going to kind of take the shackles off of that a little bit And really let the medical program go where it needs to go, but We should all bear in mind that under the current law The program has just about a year left July of 2020 if the Illinois State Legislature doesn't expand and make the medical program Or make it permanent and that shouldn't be lost in all the shuffle and excitement about adult use And I think one of the positive things that's come out of being in what I think we would all agree was the most restrictive Marketplace in the United States when the program first rolled out I think the the initial conditions were like nine, you know, Jersey may have been a little bit right But what if you look at the the landscape of the companies that have come out of Illinois? There's arguably four or five of the top ten MSO's that have come out of Illinois You've got the GTI's you've got the Crescos and I think by being in a highly regulated in restrictive environment It forced some really significant capital to come into the space and best practices to come out of the space And Illinois has actually become a leader in the international marketplace as a result of of that early You know kind of restraints that were put on us. You know, it's fascinating. I mean you have Really probably four or five of the I would say top 12 MSO's in the country that are headquartered here in Chicago That came out of this market, which is interesting given that it's by and large been a pretty crappy market Right, I mean this is not it's on the face of it where you would think Investors would be pouring lots of money right into the Illinois market when you've got a pilot program You've got a really restrictive list of qualifying conditions I mean everybody knew from day one This was not going to be the best sort of commercial market and yet you do have some of these largest players in the country That came out of here. So I mean David you mentioned some of those reasons I'd be curious to hear a little more from the panel. Why has Illinois in Chicago in particular become such a hotbed for national companies given the I mean the relative weaknesses of the of the program Cannot underscore David's point enough that We happen to be one of the most restrictive most difficult states to open up in the capital I was involved in looking at these companies as they rolled out the the intensive capital Investment for a single facility license as upwards of 10 to 15 million as a minimum Okay, per license and you have 15 operators here in Illinois and Right and on the gross side and on on that gross side. I believe in the first year you had seven to ten thousand patients I mean two years. Yeah, you can't imagine the the kind of financial stress these companies went And I know this because they had to go after round after round So to your point I think it came out of the fact that we were lucky and blessed that we had very strong capital markets and hedge funds Centured in Chicago that understood this and and and were well schooled in terms of Going the distance in in these investments. They appear they approached it not as a gamble and not as a lark It was very well thought out of and very well supported from an investor base I would agree with that I think that a lot of these guys from day one knew what they were going to do or had very good ideas and the fact that Illinois was So restrictive I gave them great incentive to look outside of the state of Illinois and to look at other states But but they're all highly highly qualified people who are all successful in other businesses and in that respect It's not really surprising at all. Yeah, that's a really good point I think a lot of people in other states out west for example The industry was built on the backs of folks that maybe were growing illegally Had been dabbling in it in some other way, but here it wasn't like that, you know, you had lawyers leaving their jobs You had real estate executives leaving their jobs I think part of that is because it was so restrictive the law was so complicated You needed a lawyer, you know to be behind a company to get it up and running and understand what all the restrictions were But I think it was it's been really interesting for me covering this industry, you know up until really last summer I think the biggest narrative was how all these companies here were getting creative to find capital You know, were they gonna go public in Canada? Were they gonna somehow convince an investor to invest in them? Were they gonna move to another state and operate which obviously is a big challenge overcome in and of itself But it does open up more capital on that way Again as recent as last summer, there are a lot of companies here that weren't who had not recouped their investments from Still not still have it still. Yeah, exactly exactly. So Sorry, we're talking about increased patient numbers. We're at 60,000 patients or so now the state of 13 million people That's not a lot. Yeah, usually it's two to three percent. That's right and here besides the opioid provision that I mentioned earlier, it's still at about 40 conditions and You know chronic pain is not one of them. That's the biggest condition qualifying condition in most states Well, let's let's yeah, let's I mean, let's let's talk about that news We're talking about the development of the program to date. This has been This has been not only discussed but actually litigated This issue of adding chronic pain as well as we talk a little bit about What's happened today or the efforts to date to get more qualifying conditions added and where does that currently stand? Well, sure We did not have a lot of success following the rules the rules required submitting petitions to the governor's board made up of 12 people who would meet every six months and they would decide Twice the governor's board came back to the Department of Health with 12 conditions that they had all approved unanimously And both times they were told no, thank you and they were turned away and the governor rejected his own panel's recommendation The government reject the governor rejected his own is allowed to do that. He was allowed to do that under the law Yes, so what happens from there? Well, so what happens from there is we wind up with people filing lawsuits and Actually, it's been fascinating though the lawsuit was filed for retractable pain the the theory was one of equal protection That the state cannot on the one hand declare that cannabis is a medicine But then on the other hand Determined that it can be a medicine for some conditions, but not for other conditions in what seemed like a very random Way that they did it and the state lost in the trial court and the trial judge ordered the state To start admitting patients into the program with chronic pain Immediately governor rounder's administration took the matter up on appeal and as a result the status quo was maintained Pending the ruling on the appeal, but it's still on appeal Governor Pritzker could direct Kwame Raul the state attorney general tomorrow to go in and withdraw The state's objection and that would in effect immediately add chronic pain to the list of Conditions that would allow you in Postsurgical intractable contract is slightly different. Yes It's still wide open but not quite as wide open as chronic pain And that hasn't happened the governor has not taken that step yet And there's a lot of people questioning why I mean the governor campaigned on expanding the medical program and on legal and Unlegalizing the easiest thing the easiest thing that the governor could do to expand the medical program is say drop this appeal And all of a sudden you've gotten tractable pain and a number of other conditions that would qualify Why why do folks think that hasn't happened yet? I think that takes away some of his political power to be able to push through the adult use if all of a sudden You are able to open the market widely to chronic pain or intractable pain Then there's less of an argument and you could split the even the majority of the supermajority of Democrats even more and makes and say well, we know we can kick adult use down the road So I mean Pritzker's a businessman right if I'm him I'm gonna push through that legislation and then I'll circle back and remove you know the blocks to Build those in past and maybe maybe I think we should also say too that there is a bill That's been introduced that would make the medical program permanent because right now. I think you said about Morgan's bill Yeah, it's still a pilot program in Illinois. Yeah, it expires next summer We've got about 16 months or so left. I believe until the program is expired. Sure. Yeah, so less So let's let's talk about that let's stay on this this issue of the qualifying conditions That really is what drives you know drives in market We look at a state like Arizona's got about I think just over five million people maybe six million people There's I think over 200,000 patients there now, right and we're still at 60,000 in a state of 13 million people here in Illinois So it's a pretty poor patient count compared to what you see in a lot of the more mature medical markets Al you mentioned the opiate bill And that that that bill was meant to expand the patient population. I think we've seen that it has had an effect It hasn't quite had the effect that seems that That folks may have expected though. So what have we seen out of the out of the opiate bill? So I think from what I'm hearing from operators the biggest influx of patients right in early February right after they passed that bill Was from the folks that were granted provisional access like I talked about earlier They could get in quick. They didn't have to wait for the application to be processed. We've been seeing a The opioid has been making a difference. They're reporting numbers on that separately from the medical cannabis program because it's seen as You know two different things and in April there were about a thousand patients enrolled in that So pretty low numbers. I think for now Everyone's except all the operators are expecting that to really pick up in other states I had mentioned with chronic pain, which is you know different than allowing opioid patients But you do get some of that population Two to three percent of the population. So I don't know what that is here like We have room to grow for like a couple hundred thousand more. Usually is what folks are expecting Yeah, easily and and growers and operators are ready for that, but they're preparing for that You know we can get into this later too once we start to talk about the new legislation that was introduced over the weekend But operators here are ready. They're they're getting ready for recreational too But they say that they can also handle a steadily increasing patient count because you know as the program grows and as Recreational comes online like it's expected to the medical program will also grow as well Just because more people are aware of it. There's still people in Illinois that don't even know we have a medical program So education is a big part of what's keeping that growth at bay right now So we'll see the opioid thing and I'll kick it back to you Chris because you pointed something out earlier It's still disproportionately beneficial to the people who are less Disproportionately affected by what's going on. There are not opioid patients in the South side of Chicago because they don't have insurance That's that's right. So my company forefront We we own an operate mission Which is the only dispensary right now in the South side of Chicago down in South Shore? It's a it's a pretty economically depressed area by and large and we've seen very little impact from the opiate bill We have seen an increase in patients. We continue to see a steady increase But we were seeing a steady increase before the opiate bill it has gone up a bit since then but From what we're hearing from talking with other operators from the statistics that are being released This bill has really impacted the dispensaries in the suburbs and in the high-income areas Where you tend to have more people with opiate prescriptions attempt more people with health insurance. It hasn't really impacted the businesses nearly as much in lower-income areas where you don't have as many people with those prescriptions where people are More likely already getting their opiates from the illicit market. And so they don't have the prescription And you just have not seen that increase in the number of patients in the in the lower-income dispensaries So alright, well, let's let's let's start moving to what's coming here The legalization bill has been introduced is a lot of exuberance around Around it and a lot of media in the last few days around this thing and whether it's gonna pass So Ali you've been covering this for a while Do you want to sort of kick us off here and give us some of the high-level highlights of what's what's currently in the bill So from a consumer standpoint the bill would allow each person to possess 30 grams of cannabis and that's per household and also you can grow five plants in a locked room Visible from the outside They're literally legalizing closet growers I think it'll be interesting to see if more clarity comes out around that because There's some natural life that might be needed. Yeah, it'd be nice to know we sell some here Not can this plant's regular plan Wink wink, right, but So on the business side, there's a huge social equity aspect of it right now The diversity numbers in as far as operators go in the industry are not great Part of that is because there was such a high barrier to entry such high application fees Licensing fees that type of thing With the medical program. So there's a huge portion that addresses that they're looking at bringing in some money from the medical program and then you know the recreational program took back loans and You know financially subsidized some of these folks that want to get into the industry They're looking at letting the medical operators now the growers become growers and keep those licenses just at those numbers for the first year And there's a the bill is over 500 pages long. So there's a lot more to it than that But hopefully that's good overview. Yeah, that's great. Now. Anything else wants to add any provisions that we didn't we didn't hit on yet? I think the 800,000 Convictions is a big deal Very big deal. I think you were talking about that in terms of Larry what that means for the economy is the local economies Especially in the areas we are on the south side where it's economically depressed. These people can't get jobs I mean, this is a real stigma for a lot of people. Let's say that's a huge portion of population 800,000 a lot of people. I mean, it's a state of 13 million people. That's 78% of the population. Yeah, it's a big percent of that and then when you're saying 100,000 people We're talking about record expungement here, right? And so can we talk through the mechanics of what that would look like what expungement itself would look like? Is it something where folks are gonna have to apply to the state to get the records expunger is the owners on the state to go and Find anybody with the cannabis. The way it's written is the police departments are gonna be responsible for identifying people in their communities and then they'll run the program to get the expungements through I'm sure they'll come up with a committee or whatever it is That should be pretty interesting. Imagine that's not going to be popular amongst a lot of law enforcement agencies. I Can't see it being well. I don't think it's gonna be popular among a lot of the people in the communities I they have to go back to the people that put them in the system in the first place to get out of the system I think there's a lot of details are gonna still have to be worked out about this Oh, no doubt. I mean look it as an old-school activist and advocate on this I mean I the owners in my mind the owners should absolutely be on the state Sure, I mean if you have a conviction the state put you through the ringer on that the owner should be on them to find They have all the records to yeah, and exactly they have the records It should not be on the individual to have to go and seek out the state and get the response I think it's unclear. I think it's the police departments are responsible for identifying the people in their community I don't believe that the people in the community have to go to the police stations to get it It's still a little unclear. Well, it may not be unclear. I haven't read all 500 pages And in most and in most states the way they've dealt with this is that the owners is on the individual with the record To then apply to the state to have their record expunge which most people are not going to do right because they don't you know How they don't understand they don't know that the law is in place. There's a fee generally associated with doing that And like you said There's a lot of people are gonna want to walk into the police station that put them in jail in the first place and say hey get rid Of my record Right particularly in communities that have been disproportionately targeted by law enforcement for marijuana crimes Remember well, we'll no longer be crimes, right? Love of drug offenses. Yeah I think there's two really interesting things about the social equity program though. One is Expunging 800,000 felony convictions extends way beyond the cannabis industry These are people who can't get jobs because they have a felony conviction not people who can't get jobs in the cannabis industry, right? They can't get jobs because the that's right, you know the The reach of that is is significant way beyond cannabis. The second thing is if you look at What's going on in the legislature right now and the people that are speaking out against the bill Madigan primarily The biggest pushback is coming from the leniency around the record expungement and the social equity program And so there's gonna be some infighting in between the moderate Democrats and the Liberals that control two-thirds majority of both houses Around this social equity component and it's gonna be really interesting to see how that plays out It's not gonna be a very popular, you know Piece of legislation to be on the wrong side of this like we were talking about I mean This is basically what sunk legalization in New Jersey so far I mean you had and I think the parallels between Illinois and New Jersey are pretty stark, right? You have a you had a you had a state both states where you had a Democratic either supermajority or very strong majority in both houses a Republican governor who had done everything he could to try and stifle the program the medical program Ended up either losing to or in Jersey's case retired and then Democrat In both states ran on legalization as a top priority push to build their first year lots of exuberance that it was gonna get Past well we're in year two in Jersey now and that bill still hasn't passed and my understanding is a big piece of that was This issue around expungement From what we hear behind the scenes They're likely were they were likely were enough votes to get it past there in the house But they were a couple of votes short in the Senate And that was over this issue of expungement and where the threshold should be in New Jersey It was any marijuana crimes that included offenses up to 500 pounds Five pounds sorry five pounds 500 pounds would be it would be a lot pretty much that was seen But but for the for the for the more moderate for there were a number of moderate more moderate Democrats there who said that's too much I can't get on board with this bill when they started doing some of the jockeying behind the scenes saying alright Well, how about if we lower it these started losing members of the Black Caucus Latino caucus who were saying no this is impacts members of our community and We're not gonna lower this because we're still gonna have a lot of members or community that are walking around with felony convictions And so the when you have an issue like this where you've got virtually no support from the Republican side of the aisle There are a few there were a few in Jersey. There's gonna be a few here But by and large this is a battle that's playing out within the Democratic Party You know, you don't have a whole lot of wiggle room if you have virtually nobody from the other side And you've got moderate Democrats that are gonna want it to be a more a little bit more of a restrictive program and then you've got Progressive Democrats that are gonna want to see it much more free and open and you've got in both states again very strong very large Latino caucuses black caucuses that want to make sure that the interests of their communities are being represented And in some cases that conflicts with what the moderate Democrats are gonna want to see So I want to come back to the social equity question here in a minute but I think this is probably a good time to Just sort of ask for predictions and what are folks thoughts here on how likely this thing is is actually to get past this this session I want everyone on the record here I think given the amount of time we have and We do have a good amount of time This session's over in a month, isn't it? We only have a month for this session. Yes. Yeah You know the Pritzker saying it's gonna be past the session and see I'll start in the reverse. Yeah, I happen I think that It's gonna happen And I think that My reasoning for it also has to do with the fact that Social inequity and is a big big deal Pritzker really behind the scenes. I'm told has worked very hard on this No doubt about no Rep Kelly and others and and also the fact that the the main constituents in the in the in the In Illinois have worked hard from a corporate standpoint in terms of lobbying as well So I think it'll pass I I want to I'll let the rest of the panel talk and I want to bring up one more point. We got one. Yes Okay, so I'm gonna remain objective as a journalist and not say one way or the other if I think it's gonna pass or fail but I will tell you what I know and I know that the Sponsors of this bill have been working on this for a long time This wasn't something they started putting together as soon as Pritzker got elected they've been working in the space and on the medical side for years and The social equity part of it that seems to be drawing some ire from some folks now Picking, you know, what's wrong with it? What can we do better? The sponsors again worked with folks minority groups of Illinois Black Caucus a Lot of different folks came to the table to put this bill together. I'd imagine that's why it's over 500 pages long so I think that You know, I think that's also part of why they waited so long to introduce it in this session We have a few more weeks to get it passed. I think it's partially because they hadn't reached a decision on stuff I was reporting out a diversity story a few weeks ago and at that point they hadn't nailed down the social equity part of it So I think this is something that they had a lot of people weigh in on and they thought You know, how are we gonna get this passed? So how do we need to write this language to get it passed before they put it in there? So take that as a yes I would like to be optimistic But I recall all of the problems that surrounded the rollout of the medical program It took longer to pass the legislation than they thought it took forever to get the administrative regulations issued long before we'll ever have An adult use sale all of these things are gonna have to be worked out. I think it's you know, very very Optimistic of them to believe that they can get it passed this session We don't have any final word on what Michael Madigan has said And we all know that nothing's gonna happen in this state unless Michael Madigan supports it I think part of what's going on is he's trying to get a feeling of the pulse of that part of the state that lives south of I-80 And whether the people down there are really gonna put their support behind this I can't speak to that one way or the other because I don't know the answer But there are a lot of issues out there that do have to be addressed. I'm not saying it can't be done But I see it as being somewhat problematic the social justice side of it is certainly the the bedrock in the foundation of this plan But even that becomes problematic in terms of Is every group that feels like it should be supported getting supported. I've talked to Number of women who are in the cannabis industry and they're very distressed by the fact that the social equity portion Says nothing about women and doesn't provide that there should be Loans or situations to allow women-owned businesses to be able to get a head start Will that go anywhere in terms of tripping this up again? I don't know But there are a lot of issues out there that we haven't been hearing about they're gonna have to be resolved before the program can get going Is that a no that's a I don't think so, but I'd like to be wrong I'm gonna be a firm. No, but I'd like to be wrong. I think the bottom line As Larry said nothing gets done in this state without Madigan behind it He has come out Saying that he's not in support of the bill because of the extensive nature of the felony expungements Sometimes and the Tribune have come out and said we'd like to see it slowed down Head of the end of the ACP has come out against it here because they don't think it goes far enough with three weeks left in this session I Don't see the state of Illinois moving that fast Will it happen this year in the next session and his Pritzker's goal to get this thing forced to a floor vote so that he can Flush out everybody's position. I think that's probably more in line with his thinking as a businessman But I'm gonna I'm gonna say unless something drastic happens and Madigan comes out and says hey This is what I want. He gets it. It's a no for this session. I'll put myself on record as well I think it's a probably not that you also very much hope I'm wrong But look no no despite all the exuberance right no state has passed legalization through the state legislature yet period Vermont came closest some consider that legalization. I'd call it like super de Krem Basically, it's you know, it's illegal to possess up to an ounce to grow up to six plants to gift it to friends But there's no legal commercial Cannabis in Vermont. They I think they will be the first day to do it I think it's gonna happen this year in Vermont because it's another step or they've already taken that first step it's really hard to get any It's really hard to get any semi controversial legislation past the first time it's introduced Because of all these issues that we've been discussing right there. There are constituents that had their constituents There are representatives that represent constituents that have specific concerns that may conflict with other representatives concerns Even if they in theory support legalization very hard to get a majority to yes on the first go around It's the reason why it hasn't happened yet anywhere despite the fact that nine states in DC have now voted for we've We've adequately demonstrated that the public is in support of legalization But the legislatures haven't quite figured out how they can get consensus amongst the legislators to get it passed So I think it's a real uphill battle to get this done this year But and this is Illinois. It's a very much of a what's in it for me So every one of these voting congressmen and voting senators still has the opportunity to pass the hat around and decide What it is that they want out of this and I don't think there's enough time left for that to happen Now to be fair though, they did get some of that already, right? I mean part of what part of what governor Pritzker did and part of the reason why they waited so long to introduce this bill was that They wanted to get the budget passed first and the budget has money allocated for pet projects all around the state that That is tied directly to cannabis revenue So if those members don't then vote for cannabis legalization, they don't get the money for that for their pet projects in their districts Um, does that make anybody a little more optimistic or it doesn't make me but Trying to try to try to try to come around on the rosy side of this here I think it's certainly a benefit towards Getting a yes vote, but I just don't think it's enough yet. I think that there's more than just You know 120 million dollars of allocation of tax resources and other things that these Legislature legislators are going to want baked into this bill. It's going to get it's an important bill It's going to get stuffed with all kinds of things before it's passed in my opinion Well, the other thing is that he's making all of these predictions about how much revenue He's going to generate off the program and the program hasn't started yet And I think that that was a problem when the medical program rolled out too that I saw investors who would come in and say we're going to make this much this year and this much the next year And the program hadn't even gotten off its feet yet So it's optimistic for for pritzker to kind of guess how much money he's going to get out of this program But you know given given the slowness with everything else. I think it's overly optimistic to suggest He's going to be getting that much money initially I do think that most of the I could be wrong about this to correct me if any of you guys know but I think some of the budget set asides that he had were from the licensing fees Yes, I believe that's right. That's true. But those those weren't budget set asides. Those were for the social equity program, right? No, I'm talking about in pritzker's budget for 2019 he had Yes, he had some line items that he took directly from licensing fees for the recreational program but Doesn't the doesn't the bill say that there's no new licenses that are going to be awarded yet the new ones But the existing license holders are still going to have to pay for their recreational license And even for well, let's let's get into that because we want to want to talk about licensing I mean my understanding is we're really not looking at new licenses for a year Right, my understanding. No new licenses for a year for anything 75 after a year for dispensaries in 20 40 for craft cultivation Processing and transportation after a year. Okay, so let's sit on the cultivation side first So that's that's 40 new craft cultivation licenses a year after the bill passes. What about the existing operators? Those get grandfathered in automatically That's my understanding the way the bills are written now They pay their fee and they're automatically granted a recreational license with unlimited capacity mostly. Yeah, there's There's yeah doubles in the details, but yeah, there's always generally speaking. There's qualifications. Essentially the idea is I've read all 500 pages of the bill Lawyers Yes flip flip the switch for the existing license holders way to year then it grants some more licenses which look there there is There's there's a really there there actually is a good public policy rationale And I say this full, you know full disclosure every day I am we are one of the existing license holders both in cultivation and retail I try not to speak out of self-interest here I've actually argued with my colleagues in a number of states on on whether or not we should add more licensees I tend to fall on the side of I think we should And we'll get into that in a moment But there is a policy rationale for giving a head start to the existing operators right number one They did take these massive risks at a time when the commercial when the program was non-commercial And then bled money for many years and so give them a little bit of a head start to recoup some of that But the biggest one is that they have the infrastructure in place But there's they're already growing cannabis and if you want the program to get up and running and you want to provide cannabis to the public As quickly as possible right let the folks who are already doing it flip the switch and start growing for adult use as well They can get to market faster. Even if you start issuing new licenses right away. They're still an administrative process They're still an application process Then they have to They have to go through zoning and permitting and you have to actually build out and you know plants take Four months to grow so even once you get plants in the ground Realistically, it's a best-case scenario. It's a year after licensing starts before anybody else is even really online So the initial folks are going to have an advantage No matter what and again, there's a public policy rationale for that my question though is Is there going to be enough supply to meet demand in this market given how few new licenses we're talking about issuing I think that With respect to demand Initially, I'm not particularly concerned about that because most of the growers are not growing on anywhere close to the full square footage That they currently have because this was accurately pointed out earlier. There just weren't enough patients to justify Justify that And it's going to take a while for new cultivation centers to get up to speed anyway So we'll find out relatively quickly whether the current cultivators can do it the the thing that we were all talking about that I'm a little surprised is Not immediately adding more dispensaries Because some of the dispensaries that currently exist certainly on the north shore, you know from time to time find themselves running out of product You know over over marketed by people who are choosing those particular dispensaries And I'm not sure that we can get by on 50 or 55 dispensaries for the entire state if we're going to have adult use You have 55 retail outlets your state of 13 million people And even they you know, even they're going to grant 75 more a year later, right again Those are not enough It's going to be at least a year before those stores start getting open And and if passes precedent for other states are probably longer But I do think they have to protect against a rush of inexperienced operators flooding the market with product that is You know has all kinds of problems. They don't have the resources allocated They don't have the revenues to be able to police all of this Um, and so I think there's some concern around if we let too many people in too quickly How how are we going to manage the market as well? It's definitely some concern around that. I've heard from growers um The other thing to point out is that most many of these big multi-state growers that are based here and have operations here Have been expanding their grow facilities running for this since last summer You know some of that was to prepare for the growing medical program like we talked about earlier But if you think about these facilities, most of them in illinois, um, I'm not sure Any of you have ever visited one, but um, they're these big unmarked facilities It just looked like warehouses in the middle of nowhere, right? But many of them when they started out they had did build outs and had phases and for many of them You know, they only had a few of their their growing rooms open and they've been expanding over the past year to Add more grow rooms build out the whole building that they had But then the other thing to consider is that they can build more buildings, you know, there's a lot of room to grow If we have a question Yeah, it's a good point, but um, some of them weren't at that they didn't have that full square Right virtually none of them are that that I don't think any of them are getting close getting close But even but even then but let's talk but let's but let's stay on this right So let's let's say for you got 15 basically 15 cultivators now And a few of them have have multiple licenses. So really not you know 19 essentially that have licenses So you're talking about 190,000 square feet total canopy space 190,000 square feet will that serve a market of 13 million people plus however many tourists come to chicago every year Is that enough so that's 1.9 million square feet if they're fully built out 100,000 per 100,000 per right, right So it's 1.9 million square feet. It's still I don't think still is that enough. Is that enough to supply the market? I'd like to throw that back at you as a commercial grower. What do you think? I don't think it is That's why I asked the question. I don't think we've seen a couple studies come out on this the There's been there's a study sponsored by the industry. There was a study sponsored by the sponsors of the bill One of the studies found that For at least the first few years the current growers could supply That's sort of that's because it takes a few years for a market to reach full maturity. I think it took colorado four or five years They say I mean, I guess that's where we're at sort of right now with with legalization in colorado Four or five years in and I think maybe if it's reached maturity now maturity being full demand Um, we hear a lot of stories about dispensaries selling out the first day that sales start But also something to consider is that the first day the first week sales start There's going to be more sales and there would be you know, even two months into the program Just because there's a rush, you know when a new store opens when a new product is available um, so but these you know these This the study that um the sponsors of the bill put out there was done by a firm in colorado And they did make a lot of comparisons to the colorado market and illinois is very different. Um, you know, we have a larger population You know, it's dispersed differently. There's a lot of things to consider here Um, I I think and you're not going to have 1.9 million square feet Right not everybody's not all of those growers max out a thousand square feet right some of the building I mean look our building maxes out at 94,000 square feet and that's not all canopy space Um, right that's your that's your total footprint. Yeah, that's the total footprint And that and so that includes the processing areas and and drying and hallways and everything else um, so Yeah, all of it at all fit within that within within the physical building that we have um I mean, so are we looking at a like a major supply problem in illinois if the spill passes as it currently stands I think that the the biggest concern would be and I could be wrong about this again Would be the dispensary side of things that number seems way off to me from all the studies that I've seen It only has And then what's 75 any a year later, which will take time for them to Come online as well. We saw that in massachusetts when they first rolled out adult use they only had I think initially three Dispensaries two and none of them were located in major metropolitan areas The first one in boston just opened about a month ago Boston metro area in brookline and so right but you know prior to that you had people like you know Getting up at three in the morning to drive to these locations to get there before they ran out of Product, I think that it's it's a natural part of it And they all have they all have limits in massachusetts product So if you go and if you go in as an adult use consumer to buy a cannabis at one of the legal dispensaries in In mass at this point still virtually every one of them will have a limit on how much you can purchase That's well below what the state limits are because I think it's the only way they can keep product in in house I think with dispensaries to if you look at the map now from where the 55 dispensaries are located the map of illinois There are some big holes part of that It's because they were I believe a handful of licenses that were never awarded or were awarded and the dispensaries never opened You know mission is the only one You know sort of on the south part of the city So there are some holes there even considering the population obviously in rural illinois There's a population disparity there But there are some holes so that would be something else I think I think you know airing on the side of caution And larry you're the the most legal Trained here if the program is going well and there's huge demand Can't they amend this program at some point? But that takes time right you got to issue more licenses they got to build out right I mean you got to recognize it's it's from licensure to opening it's Best case it's a year But what I what I what I think we got right here in illinois and I can't underscore this enough as I look at this room And I see maybe a couple of people of color here is that we got the disenfranchised right And and that's a big deal here to me in the bill. Do you mean? Yeah, it's not the medical way that it is not in the medical road, but in the bill if that passes You know we were talking about the odds of the bill passing right and and you know There's other incentives at some point it might be one year two years four years out with demand meat supply There are I believe those that read the bill all 500 pages some benefits to To including people of color and disenfranchised in terms of lower Fees as as well as I think lower taxation right so they I mean they're trying the bill is trying to address the fact that they're that That folks from disproportionately impacted communities primarily people of color people communities that have been most targeted by the drug war Have an opportunity to participate in the new legal new legal economy Which is something I think everybody would admit the medical program did not do well There's very few people of color very few women represented amongst ownership in the current medical industry in illinois And there's a recognition that we need to create avenues avenues to entry into the industry You know particularly particularly we're talking about a drug war marijuana prohibition that's been essentially fought on the backs of young people of color Right that there that there needs to be an avenue for for these folks to participate I will say i'm skeptical That the provisions in the bill will Will really achieve this goal I agree now. I I think it's it's laudable the way that they've done this but and and Frankly, i'm not sure that there is a way that they could write it that would achieve the goal um Well, look, I mean 5 000 square foot facility We're talking about craft grows 5 000. Yeah, how can a 5 000 square foot craft grower compete with 100 000 exactly And how much of a craft grower market is there going to move? We have a lot of craft breweries in chicago So, you know, there will be a craft grower market But the problem is most of the craft growers are not going to grow craft quality cannabis Especially because you have a small grower doesn't mean you're a great grower Um, and so yes the smaller growers that grow the best quality product There will absolutely be a market for that product But if they're growing mediocre quality product they cannot compete on price with somebody who's growing in 100 000 square foot facility And so that's that that will make things very difficult My concern though is it's expensive to get these businesses up and running Even a 5 000 square foot craft grow is probably going to cost close to a million dollars to get operational Right at dispensary. It's still going to cost you best case scenario half a million dollars to get operational Where does that money come from right the bill sets aside a 20 million dollars to go into uh a fund to fund To help fund social equity applicants. It's 20 grows at best Like absolute best case scenario that'll cover 20 grows. So where does the money come from? To ensure that the social equity applicants can actually get their businesses operational Right, and that's what you have the same that they had in oakland where you've got Larger companies in business and affluent investors Trying to find you know minorities and equity Uh participants to front for them and then you have to start to police that and in the application process That becomes very difficult and you run very different problems Yeah, well there were bonus points as I recall in the medical applications for uh There were bonus points. Yeah, it didn't do it didn't do a whole lot Right it didn't do a whole lot and you know, and I don't like to use the term social engineering But I mean part of what they're trying to do here is create a solution I admire what they're trying to do and I think it's the right way, but In theory, but whether or not it can actually play out specifically Uh and create the type of opportunities that they want You know, we'll have to see So, um, this is just speaking from my reporting. This isn't an opinion or anything. Um, but so Many other states have started thinking about the social equity points. Um, when they came online with their medical programs Many states east of here, ohio for example New york, I believe a lot of them built into their application programs Social equity points, you know, they awarded points for you know, certain things they require companies applying to Tell them how they would make sure their workforce was diverse and lay out that business plan from the get go Um, you know, ohio, I believe awarded a certain number of license to companies with diversity ownership that sort of thing Pennsylvania did a lot too. Pennsylvania exactly. Um Speaking with the lawmakers here when they were crafting this bill They were saying, you know, other states have tried but no one's gotten it right yet And we want to be that state to get it right. So some of the things that they were telling me was that you know Like you guys make good points, but also the That's having other licenses having other types of licenses. So with the medical program right now We have growers and sellers and that's it. So with the recreational program, there would be Delivery licenses transportation and processing processing licenses. Um, so that offer offers You know more avenues of entry into the industry There are also companies here revolution enterprises is one of them That have already started working with folks that are in these opportunity areas That are interested in getting into the industry and weren't able to get in for whatever reason on the first time around And they're helping to train them just prepare them for the application process Which can take you know months to build a team to do that Train them on growing practices and that sort of thing just to sort of help lower the barrier of entry So there's a a lot of industry operators that have already been thinking about this too But you know again take that with a grain of salt because these are the big guys And how would a new entrant ever be able to compete with a multi-stay operator at this point? So So I mean, I think what we're starting to see and this you know, this becomes a very delicate balancing act Is this this sort of partnership between mso's and Social equity license holders and we're starting to see this around the country And I mean, I've made the case and it was a shameless plugler, right? I wrote a I wrote a column for Forbes last year About how the lack of access to banking is particularly harming mom and pop business Mom and pop owners and social equity applicants, right? Because if you are if you're a license holder of say, you know one of Looking after they grant 75 licenses. We're looking at around 130 Retail licenses in a state of 13 million people Right if you had one of those licenses and this was not federally illegal Any bank in the state any bank in the country would give you a you know A small business loan or a loan to get your get your business up and running right access to capital would not be that Challenging to someone in in a market that's so that where the licenses are so limited But in the absence of that where do you go for money? And I think we're at a point now where We talk about how much more capital there is in the industry and there's a lot more capital We've seen come into the industry in the last two years But I would actually argue it's more difficult for the mom and pops today to access that capital than it was two years ago Because you have so many operators that have so much experience. And so if you're a cannabis focused fund or a An individual angel investor or a family office, which is where 99% of the money is coming from these days, right? They're going to be much more comfortable putting their money into a company that has a proven track record Rather than into somebody that's a startup that has to compete against these companies with proven track records So right now we've created a situation because of federal prohibition and the lack of access to banking where the really the most The the the most viable source of capital for the mom and pops are the large players And that you know that and that and that that that's not inherently a terrible thing If it's done the right way, but it also can be very exploitative And and we've seen it done in a way that you know that is not really beneficial for the for the social equity applicants Where they really just do become front You know front faces for the mso's rather than mso's empowering them to be actual entrepreneurs and business owners in the space I think you're right and I think that what we're really going to see here Is that social equity can only go so far as long as marijuana stays a schedule one and you know the The elephant in the room that you know people have these conversations, but we don't focus on enough Is why is it a schedule one? I mean not the the the history and all of that but today that's another panel right today Is you know You know intelligent people who understand and know and see why we haven't been able to move this off of schedule One and really off of schedule two and once we can do that and we solve the banking problems That will solve these issues that we're talking about because people will have access to small loans So I think and I only have one more one more point to make that Sorry, I was just going to say that you know, there's also The folks here in illinois that support opening up the banking system But again, there are a lot of small community banks here that A few that work with the industry now But also many of them won't touch it until it's federally not a schedule one You have money laundering problems for these banks and the bankers Unless they pass the safe act, which is currently Before congress on the federal level which would Remove a lot of these restrictions in states that have programs But in the absence of that any banker who who does the business the individual banker potentially faces Criminal penalties so, you know banks are very disincentivized right now to do this But again, if we take this off of schedule one and schedule two that problem goes away My daughter thinks that we're an episode of Ozark It's been all of our time trying to move money through the banking system So now that the the series has ended they call me once a week to get an update