Space limitation as another big issue for growers

On top of loans, there’s another major issue attached to independent craft cultivation; a limit of 5,000 square feet. A craft beer brewer is still a craft beer brewer, even if it expands out a bit; but this is also the goal, as expansion means higher revenue. This limitation on cannabis cultivators essentially limits the profits. Growers can only make what they can earn off products grown in 5,000 square feet. So, not only are they required to pay huge amounts to get an operation going; but they’re income is capped because of space requirements.

This also makes it harder for any loans that do exist; since the company can only be valued based on its growing space, and potential crop amounts. To give an idea of why this still exists in this way, consider that earlier this year, SB3105 was introduced, which would have increased the allotment to 14,000 square feet. But it was killed by representation for corporate cannabis growers, who raised concerns over something unrelated, but mentioned – synthetic cannabis. As stated, large companies are also having issues, and don’t want to compete. This was a backhanded move to keep competition down.

The government knows this limited space is a huge problem. The Illinois Department of Agriculture recently put out information on how growers can apply for more space beyond 5,000 square feet. Only problem? According to Illinois Independent Craft Growers Association founder, Scott Redman, the guidelines are non-specific. It can depend on “the market need for additional cannabis production,” as well as what regulators decide as “the craft grower’s ability to cultivate additional cannabis.” As its all up to the discretion of regulators; its not automatically accessible, and can be denied.

What happens next for Illinois independent growers?

It’s hard to say. This issue affects the entire cannabis industry, but is more relevant for smaller independent growers. Considering that none in Illinois got up and running until the most recent state forgivable loans started; it says something powerful about the need for the money in order to simply start operations. Without these loans, its quite possible that no more will get started, and the ones in operation, might not survive.

Instead, equity dispensaries are set to get the money this time around. They did not get any from the first round, because of legal issues which prevented it. One could ask why it must be one or the other, however. As Redman put it, “As far as growers are concerned, we don’t see why [giving these loans] can’t be done in parallel. There should be no reason why they can’t have X dollars for one and Y dollars for the other.”

So far, equity candidates in general are happy about the switch from third party lending to forgivable state loans; but the idea of who gets the money, is rather important. Perhaps growers are being shut out because the state doesn’t want more weed grown, than can be sold. Other states are already in the process of making deals with Indian reservations, just to get rid of product, or to stave off competition. Withholding further loans for now, could even be at the behest of bigger companies, who want to get rid of competition.