The Cole Memo

Update: I have reached out to the Cannabis Regulation Oversight Office for comment on the Disparity and Availability study.

In this article, I will be noting the fact that the Disparity and Availability study is overdue. I will also be sharing some information that has been published by the state for the sake of posterity.

1. State-Mandated Study Overdue by Nearly 3 Months
2. Media Coverage on Disparity and Availability Study
3. Mandated by Law
4. CROO’s Role in Data Collection and Policy Recommendations
5. Disparity and Availability Study
   1. What is the purpose of the Disparity and Availability Study?
   2. Who is responsible for the Disparity Study?
      1. The Nerevu Group
   3. What data is examined in a Cannabis Disparity Study?
   4. How can local businesses, stakeholders, and members of the public get involved and contribute their input?
   5. Which cannabis license types are being examined in the Disparity Study?
   6. Have other states conducted similar studies?
6. How is the information for the Disparity Study analyzed?
   1. How can I ask more questions?

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My most recent interaction with the Illinois Cannabis Regulation Oversight Office

Over the years, I have been making an effort to work with the state of Illinois to provide some clarity on the cannabis laws that exist in the state of Illinois. In the past, I’ve interviewed Danielle Perry, who served as the Cannabis Regulation Oversight Officer.

In my latest articles, The Cannabis Regulation Oversight Office provided responses to my questions on two important topics: cannabis gifting and possession limits for medical cannabis patients who choose to grow at home.

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State-Mandated Study Overdue by Nearly 3 Months

On February 7th, 2023, in a press release, the Cannabis Regulation Oversight Office (“CROO”) announced the official commissioning of the Disparity and Availability Study for adult use cannabis licenses in Illinois as required by the Cannabis Regulation and Tax Act (“CRTA”). The press release mentioned that the final report would be due to the General Assembly and the Governor in 12 months.

This means that on May 7th, 2024, the report will officially be overdue by 3 months.

Now that the Disparity Study for adult use dispensary, cultivation, craft grow, infuser, and transporter licenses has been initiated, the final report is due to the General Assembly and Governor in 12 months.

Press release dated February 7, 2023. Click here to read full press release or see below.

Media Coverage on Disparity and Availability Study

• Story by WCIA – read here
• Story by HighTimes – read here
• Story by Ganjapreneur – read here

Mandated by Law

The Cannabis Regulation and Tax Act (CRTA) mandates the Cannabis Disparity Study by the CROO:

410 ILCS 705/5-45(e)

The Illinois Cannabis Regulation Oversight Officer shall commission and publish one or more disparity and availability studies that: (1) evaluates whether there exists discrimination in the State’s cannabis industry; and (2) if so, evaluates the impact of such discrimination on the State and includes recommendations to the Department of Financial and Professional Regulation and the Department of Agriculture for reducing or eliminating any identified barriers to entry in the cannabis market. Such disparity and availability studies shall examine each license type issued pursuant to Sections 15-25, 15-30.1, or 15-35.20, subsection (a) of Section 30-5, or subsection (a) of Section 35-5, and shall be initiated within 180 days from the issuance of the first of each license authorized by those Sections. The results of each disparity and availability study shall be reported to the General Assembly and the Governor no later than 12 months after the commission of each study.

The Illinois Cannabis Regulation Oversight Officer shall forward a copy of its findings and recommendations to the Department of Financial and Professional Regulation, the Department of Agriculture, the Department of Commerce and Economic Opportunity, the General Assembly, and the Governor.

Cannabis Regulation and Tax Act – Read full language here

CROO’s Role in Data Collection and Policy Recommendations

Based on my laymen’s reading of the CRTA, the CROO has the capacity to suggest policy changes based on the data it collects.

Below is the exact wording from the law, outlining what the CROO is responsible for in terms of gathering and reporting data.

The Illinois Cannabis Regulation Oversight Officer may compile, collect, or otherwise gather data necessary for the administration of this Act and to carry out the Officer’s duty relating to the recommendation of policy changes. The Illinois Cannabis Regulation Oversight Officer may direct the Department of Agriculture, Department of Financial and Professional Regulation, Department of Public Health, Department of Human Services, and Department of Commerce and Economic Opportunity to assist in the compilation, collection, and data gathering authorized pursuant to this subsection. The Illinois Cannabis Regulation Oversight Officer shall compile all of the data into a single report and submit the report to the Governor and the General Assembly and publish the report on its website.

Cannabis Regulation and Tax Act – Read full language here.

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Below is from the website for the Cannabis Regulation Oversight Officer. (This information was gathered on 5/1/2024)

Disparity and Availability Study

The Cannabis Disparity and Availability Study (“Disparity Study”) will collect and analyze data and report on whether discrimination exists in the Illinois cannabis industry. If there is a finding that discrimination exists, the Disparity Study will evaluate the impact of the discrimination on the State and its residents regarding entering and participating in the State’s cannabis industry. The Disparity Study will include recommendations for reducing or eliminating any identified barriers to entry.  

The U.S. Supreme Court has found that governments must conduct Disparity Studies to uncover facts and concrete evidence of a compelling interest before instituting any policies that use race or gender as a program condition. Without a compelling interest based on a strong factual basis, courts have found that race- or gender-based policies violate the U.S. Constitution. Illinois’ current cannabis licensing program does not consider race and gender for licensing.  The Cannabis Regulation Oversight Office (CROO) Disparity Study will measure accessibility, whether any discrimination exists, whether it impacts entry and participation, and suggest potential remedies for Illinois cannabis regulation.

What is the purpose of the Disparity and Availability Study?

A Disparity and Availability Study (“Disparity Study”) is a study that collects and analyzes data for a report about whether discrimination exists in the State’s cannabis industry. If there is a finding that discrimination exists, it will evaluate the impact of the discrimination on the State and its residents regarding entering and participating in the State’s cannabis industry. The Disparity Study will then include recommendations for reducing or eliminating any identified barriers to entry.

The U.S. Supreme Court ruled in Richmond v. J.A. Croson in 1989 that governments must establish a “compelling interest” to support the creation of contracting programs that specifically target minority- and/or women-owned businesses. Without a “compelling interest” and a strong factual basis, courts have found that race- or gender-based policies violate the nondiscrimination mandates of the U.S. Constitution.

 The Cannabis Regulation and Tax Act requires the CROO to conduct a disparity study for each of the types of cannabis licenses issued by the State. The CROO Disparity Study will assess whether discrimination exists in the Illinois cannabis industry and the availability, utilization, and accessibility of minority- and women-owned businesses in Illinois’ cannabis industry.

Who is responsible for the Disparity Study?

Under the Cannabis Regulation and Tax Act (“CRTA”), the Cannabis Regulation Oversight Officer (CROO) is responsible for commissioning and publishing a Disparity Study for adult use licenses. CROO has commissioned the Nerevu Group for the cannabis Disparity Study after a public Request for Proposal process.

The Nerevu Group

Nerevu Group (pronounced {nay-RAY-voo}) is a data analytics firm that helps organizations uncover the insights hidden in their real-time data. With a focus on development, data intelligence, and data strategy, Nerevu ushers its clients into the data-driven future. By automating manual processes, simplifying business analytics, and integrating data silos, Nerevu empowers its clients to improve their operations and drive growth.

Nerevu Group is a 100% minority-owned firm that has assembled an experienced and knowledgeable team of minority and women-owned contractors and subcontractors from Peoria, Decatur, Springfield, Chicago, and additional locations across the country. Their combined expertise in equity analysis, disparity studies, and cannabis law gives Team Nerevu the range of skills needed for Illinois’ cannabis Disparity Study.

What data is examined in a Cannabis Disparity Study?

Generally, Disparity Studies examine the availability and willingness of businesses to enter into a government program. If there is a gap between the availability and willingness of minority-owned businesses and the participation in that program, the Disparity Study may recommend policy solutions.

For this cannabis Disparity Study, CROO has commissioned the Disparity Study to study adult use dispensary, cultivation center, craft grow, infuser, and transporter licenses. The Nerevu Group will examine both qualitative/anecdotal and quantitative data on the cannabis industry:

Qualitative and anecdotal data:

– Laws, regulations, and court cases about cannabis and disparity studies

– Unique organizational characteristics of cannabis businesses and markets, including the past criminalization of cannabis

– Surveys, focus groups, and interviews to gather public and stakeholder input

Quantitative data:

– Data on availability or qualified, willing, and able business entrants

– Cannabis application processes, responses, and results

– Cannabis business data

– The CROO Diversity Survey

– State technical assistance and supports

These data and inputs will be further defined and clarified throughout the Disparity Study process.

How can local businesses, stakeholders, and members of the public get involved and contribute their input?

More information on how to submit input and information to the Nerevu Group will be provided on the CROO website.

– The Nerevu Group will be gathering information from applicants and potential licensees over the next few months. Future information about townhalls, focus groups, and other events to share your experience will be posted on this website.

– If you are a cannabis business, you will receive the CROO Diversity Survey beginning early 2023. Your main point of contact with the State will receive the link and instructions. This mandatory Diversity Survey ensures the most accurate data is available for the Disparity Study. The 2020 and 2021 CROO Diversity Surveys will also be available to Nerevu.

– If you are a cannabis employee, you will receive the CROO Employee Diversity Survey beginning early in 2023. This voluntary and anonymous survey will improve the State’s understanding of diversity in the industry and inform the Disparity Study on the perspective of employees in the industry. Please help the Disparity Study by participating in the survey!

– Share your experiences about Illinois cannabis business licensing by using the “Contact Us” section of the webpage. You also can submit any written testimony directly to FPR.CROO@Illinois.gov.

After completion of the Disparity Study, the Nerevu Group will provide a public presentation detailing the research’s scope, methodology, findings, recommendations, and rationales. Future details will be sent to licensees, stakeholder groups, and posted on the CROO website.

Which cannabis license types are being examined in the Disparity Study?

CROO has commissioned the Disparity Study to study adult use dispensary, cultivation center, craft grow, infuser, and transporter licenses.

Per statute each license type issued pursuant to Sections 15-25, 15-30.10, or 15-35.20, subsection (a) of Section 30-5, or subsection (a) of Section 35-5, and shall be initiated within 180 days from the issuance of the first of each license authorized by those Sections.

Have other states conducted similar studies?

Maryland has conducted a more limited cannabis Disparity and Availability Study. Some local governments in other states, including San Francisco and Denver, have conducted similar studies for their jurisdictions.

How is the information for the Disparity Study analyzed?

The Nerevu Group will examine the qualitative/anecdotal and quantitative data and produce utilization and availability ratios (e.g., the minority utilization ratio would be minority-owned businesses in the Illinois cannabis industry divided by the total number of cannabis businesses).

Anecdotal and qualitative input from stakeholders and businesses will support the data analysis and provide the broader context.

The methodology will draw from court cases and legal precedent on Disparity and Availability Studies.

How can I ask more questions?

Please contact CROO at FPR.CROO@Illinois.gov. 

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