The Cole Memo

Earlier this morning, I wrote about how the Illinois Adult-Use Cannabis Industry Disparity Study was seemingly overdue by 5 months.

Shortly after I published my article, the state’s webpage for the Disparity Study was updated to include the official Illinois Adult-Use Cannabis Industry Disparity Study for 2024.

You can read the state’s press release for the Disparity Study here.

You can view the updated webpage for the Disparity Study here.

You can read the entire report below.

From the webpage:

The Cannabis Regulation and Tax Act (CRTA) requires the Cannabis Regulation Oversight Office (CROO) to commission a Disparity and Availability Study (Disparity Study) for the State’s adult use cannabis industry.  The Disparity Study was designed to evaluate whether there exists discrimination in the State’s cannabis industry and, if so, evaluate the impact of such discrimination and make recommendations for reducing or eliminating any identified barriers to entry in the cannabis market.  CROO commissioned the Nerevu Group (pronounced nay-RAY-voo), a 100% minority- and women-owned group of contractors and subcontractors, to conduct a cannabis Disparity Study on Illinois’ race- and gender-neutral adult use cannabis licensing program.  

The Disparity Study examined the 559 adult use cannabis licenses issued by the State to more than 400 businesses during the study period, which spanned from the start of adult use cannabis sales, January 1, 2020, through January 31, 2023.  The majority of the businesses that received one of these licenses were majority-owned by women or racial and/or ethnic minorities. 
The Disparity Study found that the CRTA significantly increased license ownership diversity for each license type with new licenses over the study period.  Over the study period, dispensary licenses went to 59% minority- or women-owned businesses compared to 21% for the medical cannabis market.  Additionally, minority- or women-owned businesses held 63% of craft growers, 61% of infusers, and 74% of transporters.  Nerevu further found that nearly 84% of the State’s Direct Forgivable Loans went to minority- or women-owned businesses.  These demographics make Illinois the most diverse cannabis industry in the nation.  

The Nerevu Group gathered extensive quantitative data—from applications, federal data sources, and national datasets—and spoke to over 200 stakeholders.  Nerevu analyzed all five adult use cannabis license types—dispensing organizations, craft growers, infusing organizations, transporting organizations, and cultivation centers—across all licensing rounds within the study period.  New licenses were issued for all license types except cultivation centers during this time.  By the end of the study period in October 2022, some of the new licenses became operational and began sales.  Nerevu conducted a brief review of 2023 data and noted significant growth in operational licenses and continued increased sales since the end of the study period.  After the Disparity Study, the State began another round of dispensary licenses which is not covered by this report.  

The CRTA establishes Illinois’ cannabis licensing program without race or gender preferences.  The licensing program is race- and gender-neutral with strong social equity components.  In the Disparity Study, Nerevu recommends that the State strengthen the CRTA’s race- and gender-neutral social equity provisions by (1) increasing access to capital, (2) simplifying cannabis management and administration, (3) unifying State agency policies and practices, and (4) expanding economic opportunities for new businesses.  All industry participants would benefit from these policies.  Nerevu also recommended commissioning another disparity study in 3-5 more years to assess progress for the new businesses.  

None of the recommendations are race- or gender-based and will instead target all cannabis businesses, including the new diverse licenses entering the adult use market.

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