The Cole Memo

In this article, I detail the guidance from the Illinois Cannabis Regulation Oversight Office (CROO) regarding the sale of “craft-grown” cannabis at dual-use dispensaries and the application of the medical tax rate. I briefly highlight recent developments, as covered by Illinois News Joint, regarding the state’s efforts to expand medical tax rate access to all dispensaries in Illinois. Based on previous reporting and CROO’s statements, I offer insights into how the state is likely to influence the implementation of this initiative.

1. Background on Dual-Use Dispensaries
   1. The Inquiry
      1. Response from the State
2. Looking ahead

Background on Dual-Use Dispensaries

The inspiration for this article came from a piece published by Capitol News Illinois, which raised questions surrounding the sale of “craft-grown” cannabis at dual-use dispensaries in Illinois.

Below are excerpts from the Capitol News Illinois article.

Patients can purchase marijuana as part of the medical cannabis program at dual-purpose dispensaries, which are licensed to serve both medical and recreational customers. But dual-purpose dispensaries are greatly outnumbered by dispensaries only licensed to sell recreationally, and there are no medical-only dispensaries in the state.

Until recently, dual-purpose dispensaries have been unsure as to whether craft-grown products, made by social equity licensees – those who have lived in a disproportionately impacted area or have been historically impacted by the war on drugs – can be sold medicinally as part of a patient’s medical allotment.

Erin Johnson, the state’s cannabis regulation oversight officer, told Capitol News Illinois last month that her office has “been telling dispensaries, as they have been asking us” they can now sell craft-grown products to medical patients.

“There was just a track and trace issue on our end, but never anything statutorily,” she said.

No notice has been posted, but Johnson’s verbal guidance comes almost two years after the first craft grow business went online in Illinois.

It allows roughly 150,000 medical patients, who dispensary owners say are the most consistent purchasers of marijuana, to buy products made by social equity businesses without paying recreational taxes. However – even as more dispensaries open – the number available to medical patients has not increased since 2018, something the Cannabis Regulation Oversight Office “desperately” wants to see changed. Johnson said Illinois is a limited license state, meaning “there are caps on everything” to help control the relatively new market.

[Steve] Olson said he contacted state agencies, including the Department of Financial and Professional Regulation, months ago about whether craft products can be sold to medical patients at their retail tax rate, but only heard one response: “They all say it was an oversight.”

This potentially hurt social equity companies because they sell wholesale to dispensaries and may have been missing out on a consistent customer base through those medical dispensaries.

The state’s 55 medical dispensaries that predate the 2020 legalization law, mostly owned by publicly traded multistate operators that had been operating in Illinois since 2014 under the state’s medical marijuana program, were automatically granted a right to licenses to sell recreationally in January 2020. That gave them a dual-purpose license that no new entrants into the market can receive under current law.

The article noted confusion regarding whether social equity licensees’ craft-grown products could be sold to medical cannabis patients at the reduced medical tax rate.

I found the recent confusion surprising because I first covered this issue in 2022 in collaboration with the Illinois Cannabis Regulation Oversight Office. Below is an excerpt from my interaction with CROO:

Question from Cole: Did I understand correctly when HB1443 was passed into law and it allows craft growers to sell their cannabis as medical cannabis?

• Answer from state of Illinois Cannabis Regulation Oversight Office: Yes—that is correct. Craft growers and infusers can sell product to medical dispensaries to sell as medical product. I’ve included the portion of the statute alluding to this below.
  • 410 ILCS 130/130
  • “A dispensing organization is prohibited from acquiring cannabis from anyone other than a cultivation center, craft grower, processing organization, another dispensing organization, or transporting organization licensed or registered under this Act or the Cannabis Regulation and Tax Act. A dispensing organization is prohibited from obtaining cannabis from outside the State of Illinois.”

Originally posted on May 8th, 2022

Given the importance of clear regulatory guidance, I reached out to the Cannabis Regulation Oversight Office (CROO) to get an official statement on the matter. Here’s what I learned.

The Inquiry

After reading the Capitol News Illinois article, I contacted Erin Johnson, the state’s Cannabis Regulation Oversight Officer (CROO), to clarify whether dual-use dispensaries—licensed to sell both medical and adult-use cannabis—needed to follow any specific steps to sell craft-grown products to medical patients under the medical cannabis tax rate. I have previously been told that these issues were related to a specific point of sale.

It was important for me to determine if there were any regulatory barriers preventing this from happening smoothly. This is the message that I sent to CROO

Hello

I hope that everybody in CROO is doing well. I wanted to reach out for an official statement from the state regarding an important issue I recently read about in Capitol News Illinois.

The article mentions that dual-purpose dispensaries were previously unsure whether craft-grown products, produced by social equity licensees, could be sold to medical patients as part of their medical allotment. It was noted that Erin Johnson, the state’s cannabis regulation oversight officer, clarified this issue, stating that the state has informed dispensaries they can indeed sell craft-grown products to medical patients, resolving what was described as a “track and trace issue” on the state’s end.

I would like to request an official written statement on this matter to ensure that both patients and dispensaries have clear and consistent guidance. In your statement, could you please specify the steps that dual-use dispensaries need to take in order to sell craft-grown products, as there still seems to be some confusion on this point?

Thank you for your time and attention to this request. Thank you for everything that you do. I look forward to your response.

Cole

Message sent August 29, 2024

Response from the State

This is the message that I received Erin Johnson, the Cannabis Regulation Oversight Officer.

Cole,

There are no formal steps to take for dual-licensed dispensaries to sell craft grow products at the medical tax rate. Any dispensary with questions regarding sale of craft products at that rate should contact IDFPR at FPR.MedicalCannabis@illinois.gov.

Erin Johnson

Message received September 24, 2024

Erin Johnson confirmed that there are no additional steps required for dual-use dispensaries to sell craft-grown products at the medical cannabis tax rate. This means that dispensaries offering both adult-use and medical cannabis can freely sell “craft-grown” products to medical patients under the appropriate tax rate. Johnson emphasized that dispensaries with further questions should reach out to the IDFPR for any additional clarification.

Looking ahead

The response from the CROO clears up any confusion: dual-use dispensaries can sell craft-grown cannabis to medical patients without facing additional regulatory hurdles. If there’s any remaining uncertainty, dispensaries are encouraged to contact the IDFPR directly.

This clarification comes as the IDFPR and CROO are reportedly working to expand access to the medical tax rate at all dispensaries across Illinois. As highlighted by the local cannabis news outlet Illinois News Joint, which referenced the state’s Annual Cannabis Report for Fiscal Year 2024, one of the department’s key goals for Fiscal Year 2025 is to allow registered medical cannabis patients to receive the medical tax rate at any dispensary in the state, not just those specifically licensed for medical sales.

Based on previous coverage, it appears that CROO will be encouraging the legislature to enact this policy. Based on my limited-understanding of this issue, CROO does not have the legal authority to implement the policy directly so it seems that they will be using their influence to push for its adoption.

Johnson, who became the state’s top cannabis regulator in late 2022, expressed hope for movement during the fall veto session on House Bill 2911, which would expand medical access to all Illinois dispensaries.

“We would like every single dispensary in Illinois to be able to serve medical patients,” Johnson said. “It’s something that medical patients have been asking for, for years.”

Johnson said the bill would benefit patients and small businesses.

“It’s something we desperately want to happen as a state system, because we want to make sure that medical patients are able to easily access what they need,” she said. “We also think it’s good for our social equity dispensaries, as they’re opening, to be able to serve medical patients.”

Source

The fall veto session starts on November 12th. More concrete details, including relevant language from the law, are provided in this Illinois News Joint article.

#247 – What could rescheduling mean for cannabis policy? – The Cole Memo

I’ll be joined by a surprise guest to recap the latest developments in cannabis policy and what they could mean for both businesses and consumers. Read full show notes here: https://thecolememo.com/2025/12/22/e246/

1. #247 – What could rescheduling mean for cannabis policy? 54:03
2. #246 – Cannabis Is Legal in Illinois, So Why Are People Still Being Arrested 40:14
3. #245 – Live From the Oval Office: Trump Directs AG to Expedite Cannabis Rescheduling Process 39:06
4. #244 – Talking Cannabis Rescheduling With Its Harshest Critics 44:25
5. #243 – Social Equity, Transporters, Rescheduling, and the Future of Hemp With Ali Jubelirer 01:01:29