WICKER PARK — After attending a Humboldt Park weed workshop Tuesday, Wicker Park neighborhood leader Kyle Sneed walked to his car and found something odd tucked under his windshield wiper: a $10,000 “signing bonus” to open a weed shop.
In addition to the $10,000, a company, World of Weed of Tacoma, Wash., offered Sneed co-ownership of a cannabis dispensary in Chicago.
The catch?
Sneed needed to have “social-equity” status.
Sneed, who does not qualify for social equity status, described the approach as “shameless.”
“It was not necessarily predatory, but it didn’t make me feel good,” said Sneed, president of the Wicker Park Committee. “I personally just have a moral issue with companies trying to buy applicants.”
On Jan. 1, weed becomes legal in Illinois, and a billion-dollar industry based on the production and retail dispensing of cannabis will soon bloom throughout the state.
With state-licensed medical cannabis dispensaries getting the first wave of recreational licenses, all 11 of the dispensaries that can sell recreational weed on Jan. 1 are owned by white men.
More licenses will be issued in May and it’s anticipated many will be given to “social-equity” applicants — people who have been hit the hardest by the war on drugs.
Alden Linn, owner of World of Weed, told Block Club that while, “on paper, it might look like that,” his company was not trying to “buy” social-equity applicants.
The franchise offer includes a 51 percent ownership of the license and the retention of 51 percent of profits.
“We’re a funding partner,” he said. “We have the expertise of operating these retail establishments. … We provide the business plan, the cash plan, the alarm systems, all the things that go along with these businesses.”
Luis Carrizales, chief of staff for state Rep. Delia Ramirez, a co-sponsor of Tuesday’s event, told Block Club that operating a cannabis franchise while partnering with an equity applicant is legal.
“In an ideal world, we would like 100 percent ownership [of dispensaries] from people of color and targeted communities,” Carrizales said. But “we know that, in reality, there are a lot of costs associated with it.”
The issue of ensuring Chicagoans who were adversely affected by harsh drug laws get a fair shake at the new cannabis industry came to a head this week.
At the demand of the Black Caucus, city leaders debated whether to extend citywide cannabis sales to July 1.
The Black Caucus’ effort to stall weed sales failed Wednesday, however, in a dramatic 29-19 vote at City Council.
RELATED: Weed Will Be Sold In Chicago Jan. 1 As Black Caucus Attempt To Stall Pot Sales Fails
Ald. Walter Burnett Jr. (27th), who has said he’ll only support dispensaries aiming to open in his ward if they are partnering with a black operator, said they gained some wins by bringing their proposal to a vote, a move that once was considered a longshot. He ultimately changed course on the push to delay, helping to vote down the proposal Wednesday.
‘Like A 7/11’ Of Weed
World of Weed opened its only active retail cannabis dispensary in Tacoma, Wash., in 2015, Linn said. The company is pursuing licensing agreements in California as well as Illinois.
Linn said the business model he’s offering Chicagoans aligns with the state’s desire to empower those adversely affected by the War on Drugs.
“I’m a small operator just wanting to help out other small operators,” he said.
In exchange for retaining 49 percent of the licensing and profits, World of Weed finances costly startup needs, such as store buildout and inventory supply. These two aspects of the business alone cost about $250,000 each, Linn said.
Linn said the franchising model would work “like a 7/11.”
“We’re acting kind of like a bank, so to speak,” he said. “It costs half-a-million dollars just to turn the key.”
Before signing up to open a World of Weed or entering into a similar partnership, Carrizales encouraged interested folks to vet offers from cannabis companies.
Residents should get in touch with the Illinois Department of Commerce and Economic Opportunity, a state agency that can help sift scams from genuine opportunities, Carrizales said.
“We understand how someone approaching an individual out of the blue would look problematic,” he said. “We urge people to really look at [the agreement], to make sure they’re not getting into something that’s not in line with what the law stipulates.”
After learning more about what the offer entailed on Thursday, Sneed said he wasn’t happy with the way in which World of Weed distributed its materials.
Of the roughly 100 residents who attended Tuesday’s town hall, many were people of color from neighborhoods across the city, Sneed said.
“The whole $10,000 written on the flier, that bugged me. That’s not right,” he said. “If they really wanted to get true social-equity applicants, they would have been in that town hall … making genuine connections. Instead of paying someone to leave flyers on cars.”
In Wicker Park, Sneed added, neighborhood leaders look forward to hearing from social-equity applicants in the New Year.
Dispensaries wishing to open on bustling Milwaukee Avenue between Ashland and Damen avenues will almost certainly need a zoning change, which means they’ll need to pitch their idea to neighborhood leaders, Sneed said.
“We’d love to have some strong social-equity applicants come talk to us about any plans they might have,” he said.
RELATED: Wicker Park Leaders Agree To Consider Weed Shop Proposals — But Not Without Caution
What Is Social-Equity Status?
Under state law, a cannabis operator can only qualify for social-equity status if at least 51 percent of a business is owned and controlled by a person or group who:
- Have lived in a Disproportionately Impacted Area in five of the past 10 years (see map)
- Have been — or have a parent, child or spouse who has been — arrested for, convicted of or adjudicated delinquent for cannabis-related offenses eligible for expungement. These include cannabis possession up to 500 grams or intent to deliver up to 30 grams.
Additionally, a business could qualify for social-equity status if it has more than 10 full-time employees, more than half of whom:
- Currently live in a Disproportionately Impacted Area (see map)
- Have been — or have a parent, child or spouse who has been — arrested for, convicted of or adjudicated delinquent for cannabis-related offenses eligible for expungement. These include cannabis possession up to 500 grams or intent to deliver up to 30 grams.
For more information on social equity applications and licensing, visit the state’s website.
Those who missed Tuesday’s workshop in Humboldt Park can talk to cannabis law experts 10 a.m.-noon Friday at Mi Terra Restaurant, 2528 S. Kedzie Ave. in Little Village.
Register for the Little Village workshop here.
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