Domino Effect? Illinois Marijuana Legalization Could Spur Other States

The Illinois Legislature is winning praise for having dealt upfront with the tough social equity issues raised by legalization.
Domino Effect? Illinois Marijuana Legalization Could Spur Other States
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This story originally appeared on Marijuana Business Daily

Illinois, the nation’s first state to legalize commercial recreational marijuana through its Legislature, may spark similar legalization efforts elsewhere in the country -- and could serve as a blueprint for others, according to industry executives. That could open the doors to millions, if not billions, of dollars in fresh business opportunities for cannabis growers, manufacturers, retailers and ancillary businesses.

Marijuana Business Daily estimates that Illinois’ new rec law alone could generate up to $2.5 billion in annual sales when the program matures, depending in part on how many tourists buy adult-use MJ products while visiting Chicago, the third-largest city in the U.S., and other parts of the state.

Related: New Jersey Lawmakers Admit Failure on Weed Legalization, Will Let Voters Decide in 2020

“The gates are open now for state legislatures to tackle the issue,” Morgan Fox, media relations director for the National Cannabis Industry Association, said of Illinois’ new law.

Looking ahead, Illinois could also serve as a model for how to ensure that minorities and economically disadvantaged individuals are able to participate in the fast-growing cannabis industry. Adult-use legalization stalled in both the New Jersey and New York legislatures this year as they struggled over how to best address industry and racial inequities.

“We focused on equity very, very early … and I think that made a huge difference in the end result,” said Chris Lindsey, a senior legislative counsel for the Marijuana Policy Project who participated in Illinois’ marijuana legalization working groups.

Steven Hawkins, MPP’s executive director, said in a statement he believes the Illinois measure, with its criminal justice and social-equity provisions, will set a “standard of excellence” for similar state efforts. Hawkins told MJBizDaily in late November that up to an additional 15 states could legalize rec MJ in the next three years or so, through a combination of legislative efforts and ballot initiatives.

Related: Illinois to Become 11th State to Legalize Adult-Use Marijuana

Michigan an influence? 

Michigan, a neighbor to the northeast of Illinois, may have provided Illinois Gov. J.B. Pritzker and the state Legislature impetus to approve legalization last week. Michigan voters approved a recreational MJ initiative last November that MJBizDaily projects will create up to a $1.7 billion-a-year industry.

MPP’s Lindsey said officials were well aware of the potential that Illinois residents would travel across the border to buy recreational cannabis in Michigan. And Pritzker did push up the timetable for launching adult-use sales to Jan. 1, 2020. “But I never got the sense that (Michigan) drove the (legalization) discussion,” Lindsey said.

Instead, Lindsey and others identified the following key factors to the Legislature’s success:

  • Two lawmakers, Sen. Heather Steans and Rep. Kelly Cassidy, had worked on legalization for a number of years and then Pritzker helped drive home the efforts.
  • Advocates focused early on working with diverse interests to address concerns that the marijuana industry is “pretty white,” Lindsey said.

Earlier this year, a new MJ advocacy group formed called “Legalize Illinois” that included business owners, religious leaders, unions, activists and lawmakers. Lindsey said the working groups continued to think of ways to strengthen equity provisions, in hopes of better withstanding legal challenges later. The result was a bill that will expunge cannabis convictions and provide extra application points and financial resources for social-equity applicants.

Related: This Is Non-Negotiable: Cannabis Legalization Must Include Restorative Justice

That’s not all.

Other, more typical factors also bolstered legalization in Illinois:

  • The realization that marijuana could generate a new line of tax revenue for the state, to the tune of millions of dollars.
  • Strong underlying public support. Two-thirds of Illinois residents have been in favor of legalization since early 2017, according to polling by Southern Illinois University.

However, to accommodate Pritzker’s aggressive timetable for launching sales by January 2020, the legislation needed to be more specific to take some of the rulemaking burden off state agencies, Lindsey said. In fact, the bill grew from 150 pages to 610.

Kris Krane, co-founder and president of Arizona-based 4Front Holdings, a multistate cannabis operator and consulting firm, said the result is a measure with “huge” business opportunities, especially for incumbent MMJ license holders and social-equity applicants. “It doesn’t have the robust licensing structure that we have in some Western states,” Krane said.

While existing MMJ operators will be able to sell rec MJ beginning Jan. 1, 2020, additional business licenses won’t be awarded until the spring and summer of 2020.

Jeff Smith can be reached at jeffs@mjbizdaily.com

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