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Stewart: Medical marijuana is coming to McHenry County region

Now, almost a full year into the four year Compassionate Use of Medical Cannabis Pilot Program Act’s duration, medical cannabis facilities look like they may be open for business in the first half of 2015.

A large part of the delay was waiting for the State Departments of Agriculture, Financial and Professional Regulation (DFPR), Public Health, and Revenue, to enact rules and regulations governing various aspects of medical cannabis usage, sales, taxing, quality standards and business operations.

Last month, applications for medical cannabis dispensaries and cultivation centers could be submitted. The DFPR received 214 applications for 60 available dispensary locations and 159 applications for 21 available cultivation center locations. There are nine applicants vying for the one available cultivation center in the district comprising DeKalb, DuPage, Kane, Lake and McHenry counties. There is one available dispensary license for McHenry County, two dispensary licenses are available for Kane County and three are available for Lake County.

In terms of economic benefit, the state stands to gain more than $6 million annually from the licensing of all cannabis facilities, not to mention millions more in non-refundable application fees from applicants who do not receive a license. This income, however, pales in comparison to the potential income the state may generate from a 7 percent tax on all sales from cultivation centers to dispensaries, and an additional 1 percent tax on all retail sales to licensed users. An estimate indicates that there may be 10,000 licensed users in the early stages of the pilot program (although there are currently less than 3,000 applications for use).

Acknowledging the variables of the number of users, the price of cannabis and the amount each user purchases, the state stands to make tens of millions of dollars from the medical cannabis industry sales in the near future.

If Illinois follows a similar trajectory to Colorado when Colorado had legalized marijuana for medical usage (before recreational usage), there may eventually be tens if not hundreds of thousands of licensed users. Such expansion of licensed users would proportionately trigger more tax revenue from wholesale and retail sales of cannabis.

In terms of local impact, local governments do not have a clear path to direct income from medical cannabis sales within their jurisdiction.

Nonetheless, job creation is a possible boon to local economies. Some business plans of cultivation centers anticipate as many as 60 full- and part-time jobs being created from a single facility.

Dispensaries would not represent such robust job growth, but may still have a handful of employees per facility.

Considering that so many entrepreneurs are committing so many resources to obtain licenses from application fees to initial build out investment to other start-up costs, and considering that the state stands to generate tens of millions of dollars in income from licensing and taxing the industry, it is hard to imagine that medical cannabis will not continue past 2017 when the pilot program is currently set to expire.

• Brad Stewart is an attorney with Zukowski, Rogers, Flood & McArdle in Crystal Lake. Stewart devotes most of his practice to corporate and local government law. He can be reached at bstewart@zrfmlaw.com.

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