(309) 740-4033 tom@collateralbase.com
Victory for Hemp

Victory for Hemp

Hemp Ban Overturned

Hemp is completely legal to grow in Illinois with the proper state license.

Illinois Hemp Ban Overturned in Rural Oakland

The City of Oakland tried to ban hemp farming inside its city limits by claiming authority under the Illinois Municipal Code section regarding Urban Agricultural Areas. Collateral Base represented the prejudiced farmer and had the municipal ordinance tossed by an Illinois Court. Because the City of Oakland is not a home rule community Dillion’s Rule in Illinois barred the City from banning hemp due to its lack of authority. 

Let’s touch on what is a “home rule” or “non-home rule” municipality in Illinois. 39 States follow “Dillion’s Rule” – including Illinois – and it allows municipalities to allow themselves to govern their community with greater detail than the state law applies, but first they must become a “home rule” unit of government.

Q: What is “home rule,” why would a community want to become a home rule unit, and how?

A: In Illinois, home rule is the State constitutional authority of local governments to override the state and self-govern provided the General Assembly did not explicitly limit that power or maintain the exclusive exercise of authority in a specific area, for example the CRTA limited home rule communities from banning home grow cannabis for medical marijuana patients.

Home rule municipalities explicitly have police powers.  Article 7 of the Illinois Constitution regarding home rule provides that they “may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt” without specific statutory authority.

 

Hemp Questions?

How home rule is different than non-home rule

Non-home rule basically bows to the state laws, unless the municipality has a statute or enumerated constitutional powers that enable it to create new ordinances. However, a home rule municipality can go beyond state regulations unless expressly pre-empted by statute and can rely on its police powers.  Here we will examine the differences between the language from the Illinois Constitution on home rule units. 

The City of Oakland went beyond its non-home rule powers when making its hemp farming ban.

Ill. Const. Art. 7, § 7 for Non-home Rule Municipalities

  1. to make local improvements by special assessment and to exercise this power jointly with other counties and municipalities, and other classes of units of local government having that power on the effective date of this Constitution unless that power is subsequently denied by law to any such other units of local government;
  2.  by referendum, to adopt, alter or repeal their forms of government provided by law;
  3.  in the case of municipalities, to provide by referendum for their officers, manner of selection and terms of office;
  4.  in the case of counties, to provide for their officers, manner of selection and terms of office as provided in Section 4 of this Article;
  5.  to incur debt except as limited by law and except that debt payable from ad valorem property tax receipts shall mature within 40 years from the time it is incurred; and
  6. to levy or impose additional taxes upon areas within their boundaries in the manner provided by law for the provision of special services to those areas and for the payment of debt incurred in order to provide those special services.

These are the only powers a non-home rule municipality in Illinois may have – so the City of Oakland had to try and find another statute that enabled them to ban hemp farming throughout its city limits.  We will get to that soon, but we note that the City of Oakland then argued that the statutory authority did not matter because they could ban hemp under its police powers – but non-home rule municipalities do NOT have police powers.  As you can see from the powers of the Home Rule Units under Section 6 of  Article 7 of the Illinois Constitution below.

SECTION 6. POWERS OF HOME RULE UNITS

(a) A County which has a chief executive officer elected by the electors of the county and any municipality which has a population of more than 25,000 are home rule units. Other municipalities may elect by referendum to become home rule units. Except as limited by this Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt.

We put the police powers in bold.

What are Police Powers in Illinois?

They are: the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt.

Urban Agricultural Areas in Illinois

The City of Oakland went to the Illinois Municipal Code and found a restriction against urban agricultural areas that a city can regulate if it bears a direct relationship with the public health, safety or welfare.

The only problem was – this law did not exist until 2019 and Oakland had no urban agricultural area. The City of Oakland tried to find any method they could to ban the hemp farming inside its city limits.  The City argued that its zoning laws from 1968 qualified as an urban agricultural area.  This is not how law works, as statutes do not operate retroactively.

Division 15.4 of the Illinois Municipal Code, titled Municipal Urban Agricultural Areas

The cited statute, 65 ILCS 5/11.4-30(a,) provides in full:

(a) A municipality may not exercise any of its powers to enact ordinances within an urban agricultural area in a manner that would unreasonably restrict or regulate farming practices in contravention of the purposes of this Act unless the restrictions or regulations bear a direct relationship to public health or safety. (Emphasis Added).

The City of Oakland skipped over all the regulatory hurdles to get to its objective of banning hemp.  Illinois amended the Illinois Municipal Code in 2019 to provide for urban agriculture and provided protections and procedures for farmers to establish an “urban agricultural area.” We must review Article 11, Division 15.4 of the Code regarding Municipal Urban Agricultural Areas. The City looked straight past the controlling provisions of the Code in search of its desired ends – banning hemp farming in its City limits. The City skipped right over numerous Sections of the Code that requires prior to adopting an ordinance designating an urban agricultural area, the municipality must:

  1.  receive an application for establishing an urban agricultural area [65 ILCS 5/11-15.4-15(a)]; 
  2. establish an urban agricultural area committee after receiving an application to so establish one [65 ILCS 5/11-15.4-10(a); 
  3. elect a chair for that committee [65 ILCS 5/11-15.4-10(b)]; 
  4. fix a time and place for a public hearing and notify each taxing unit of local government [65 ILCS 5/11-15.4-20]; 
  5. publish notice of this hearing in a newspaper of general circulation for days before such hearing [65 ILCS 5/11-15.4-20]; and 
  6. hold the public hearing; allow any interested person – like the Plaintiffs in this case – to appear and voice objections and comments with respect to the hearing [65 ILCS 5/11-15.4-20].
  7. Only after such public hearing, and in compliance with the procedures as provided in the Code, may the municipality adopt an ordinance establishing and designating an urban agricultural area [65 ILCS 5/11-15.4-20].

The City of Oakland did none of these things in banning hemp farming from its City limits. Instead, it just said that it did, which the court pointed out that it clearly did not and had no ‘urban agricultural area’ to regulate. Therefore, the City’s ban on hemp failed under judicial review.  The City of Oakland may try to appeal the decision, but that won’t fix the problems with its hemp ban. 

Illinois hemp bans may not be possible in home rule municipalities either because of the State’s comprehensive hemp licensing program, but that issue remains for another day.  

Thomas Howard

Thomas Howard

Cannabis Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.
R. Martindale

Need A Business Lawyer?

Call our law offices with your legal questions for help on:

  1. real estate contracts
  2. business contract disputes
  3. Shareholder litigation
  4. cannabis business
  5. fraud actions
  6. mechanic's liens

 

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Banking For Cannabis Companies in Illinois

Banking For Cannabis Companies in Illinois

Banking For Cannabis Companies in Illinois

Cannabis companies are notoriously tricky clients for banks and credit unions. An innovative program in Illinois hopes to fix that.

cannabis banking consulting

Cannabis is a classic example of an “underbanked” industry. The tangled and contradictory web of state and federal laws have convinced many banks that cannabis simply isn’t worth the trouble. Illinois hopes to fix that.

We’ve written many times before about the problems facing cannabis businesses as they try to get access to basic banking and payment processing services. Over the past couple of years, there has been a surge of legislative effort to try and help the chronically underbanked cannabis industry. Unfortunately, many of these efforts are being stymied by the ongoing COVID-19 crisis as states and Congress effectively grind to a halt.

Nevertheless, many states are still undertaking innovative programs to help their burgeoning cannabis companies get access to financial services. In this particular article, we’re going to look at the current state of cannabis banking, and look at one particularly promising initiative out of Illinois.

Cannabis and Banking: A Brief History

The first major crack in federal marijuana prohibition came in 2013 from the Obama Administration. Deputy Attorney General James Cole put out a memorandum entitled “Guidance Regarding Marijuana Enforcement”, known more commonly as the Cole Memorandum. Essentially, the Cole Memo set a policy at the Department of Justice to deprioritize enforcement of the Controlled Substances Act (CSA) in states which had legalized marijuana. The Cole Memo was rescinded in 2018 by then-Attorney General Jeff Sessions. However, the one-page memo from Attorney General Sessions effectively left CSA enforcement to the discretion of local prosecutors. As we’ve seen in Illinois, local federal prosecutors don’t seem to have any particular interest in enforcing the CSA in the face of a booming cannabis industry.

 

Shortly after the Cole Memo, the Federal Crimes Enforcement Network (FinCEN) issued guidance to financial institutions regarding their obligations under the Bank Secrecy Act (BSA). The FinCEN guidance notes that, due to the CSA, financial institutions are still required to file suspicious activity reports (SARs) when dealing with cannabis businesses. FinCEN creates three categories of SARs for financial institutions dealing with cannabis businesses: (1) “marijuana limited” SARs with limited information for otherwise legitimate banking clients; (2) “marijuana priority” SARs, for banking clients which implicate the Cole Memo concerns like non-cannabis crime, and; (3) “marijuana termination” SARs, where there’s clear criminal activity like money laundering. Cannabis clients operating legitimate businesses in legal markets, such as dispensaries and growers in Illinois, are likely to fall into the “marijuana limited” category. This is essentially a way for banks to comply with the BSA, while telling FinCEN that the client isn’t a priority.

Recent Developments in Cannabis Banking

cannabis banking consultingDespite the support provided by the Cole Memo and FinCEN, many banks are understandably extremely reluctant to enter into the cannabis market. After all, these documents are merely guidance memos, subject to the political winds of the day. As a result, there have been several major legislative efforts on behalf of the underbanked cannabis industry.

At the federal level, there is the “SAFE Banking Act”, which we’ve covered here in much greater detail. Essentially, the bill provides a safe harbor for credit unions and private banks to get a limited-purpose state charter to allow them to provide services to state-legal cannabis businesses. The SAFE Banking Act was introduced by Congressman Ed Perlmutter (D-CO) and co-sponsored by a bipartisan group of Congressmen. The bill passed the House of Representatives last September by a bipartisan 321-103 vote. It still has to make it through the Senate, where it has 33 co-sponsors including five Republican Senators. Of course, between the upcoming Presidential election and the COVID-19 near-shutdown of Congress, the SAFE Banking Act is unlikely to become law this year.

At the state level, there are some encouraging developments. In Colorado, Governor Polis unveiled his administration’s “Roadmap to Cannabis Banking & Financial Services.” Unfortunately, the Roadmap is little more than a series of goals and vague plans, with concrete policies to follow at some later date. California has provided some more robust guidance to help financial institutions develop the appropriate compliance protocols. Illinois has had some legislative proposals, which we have discussed elsewhere.

SUPPORT FOR CANNABIS IN ILLINOIS

The one major bright spot in Illinois is the “Community Invest Cannabis Banking Services” initiative put out by the Illinois State Treasurer. The idea behind Community Invest is fairly straightforward. The program provides investment capital at a reduced rate to qualified financial institutions so they can expand services to cannabis-related businesses. The capital comes in the form of two-year term deposits, with a variable monthly rate based on Federal Overnight Excess Funds. The application process is also fairly simple:

  1. Step 1:  Become an Approved Program Depository: depending on the total deposits and collateral pledged by the bank, there are different application forms. The applications focus on financial disclosures by the applicant so that they can get on the list of approved institutions to participate in the Treasurer’s Community Development Link Deposit and Access to Capital Programs. To get a better idea of the institutions involved, a full list of approved depositories is available here.

 

  1. Step 2: Review Eligibility and Submit Application: applicants need to fill out the form and provide a host of detailed information, including a business plan with information like risk assessment and mitigation strategies.

Unfortunately, the Illinois State Treasurer seemingly has not done much to promote this program. The State of Illinois has a robust opportunities for institutions looking to invest in historically underserved communities. Indeed, the Cannabis Regulation and Tax Act places special emphasis on “social equity” and Disproportionately Impacted Communities, or DIAs. The state will be announcing the winners of the most recent round of dispensary applications next month, so the need for cannabis banking services is about to increase tremendously in Illinois. Banks and other financial institutions would be wise to take a look options for serving cannabis businesses sooner rather than later.

David Silvers

David Silvers

Regulatory Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.
R. Martindale

Need A Business Lawyer?

Call our law offices with your legal questions for help on:

  1. real estate contracts
  2. business contract disputes
  3. Shareholder litigation
  4. cannabis business
  5. fraud actions
  6. mechanic's liens

 

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How To Raise Money Through A Private Placement Memorandum

How To Raise Money Through A Private Placement Memorandum

Private Placement Memorandum

Raising Money PPM

A PRivate Placement Memorandum (PPM) is a complex legal document that provides great detail into a company and offers a portion of its ownership for sale to an investor, often an Accredited Investor as defined under Regulation D for the SEC. 

Private Placement memorandums could be used to raise capital when a company cannot otherwise access the capital markets.  Perhaps a bank would not loan the company money, but an investor may for a stake in the game.  The PPM would provide detailed information of the equity state being offered in the business.

Private Placement Memorandums in the Cannabis Industry

PPMs are popular in the cannabis industry because of the lack of financing options resulting from its federal prohibition.

Why You Should NOT Use Templates for your PPM

using templates to do your private placement offering is okay – when you are in good hands and they have used such templates to craft and customize private placement offerings for the unique conditions of the specific business deal being offered. 

Unfortunately, some entrepreneurs want to keep legal and consulting costs to an absolute minimum and take a form they got on the internet and try to stick their names in the right places.  This could cause headaches and huge problems if anything goes wrong, which is more likely to happen when you are cutting corners instead of doing the due diligence required.

Here’s a link to Private Placement Memorandum Template Library

FINANCING YOUR BUSINESS THROUGH A PRIVATE PLACEMENT MEMORANDUM

As this article is written, small businesses are being ravaged by the effects of COVID-19. The Small Business Administration is stepping up with all kinds of offerings to help small businesses weather the storm. Still, times are very difficult and uncertain for business owners, and there’s a good chance that credit will be tight over the coming months. For prospective small business owners, the hardest part might be simply finding a bank that is even open and available to meet during the ongoing COVID-19 pandemic.

Fortunately, budding entrepreneurs don’t have to rely on taking on big, high interest loans from a bank. Instead, there is an alternative: the private placement memorandum, or PPM. The federal Securities and Exchange Commission (the “SEC”) provides this helpful guide on the legal basics of a PPMs. In this article, we’re going to go over some of the highlights of the PPM route, which will help you determine if a PPM is the right course for your business.

  1. What Is A PPM?

Generally, when someone wants to sell securities in a company, they have to go through the registration process with the SEC. This applies not only to the Googles and Facebooks of the world, but also to much smaller companies as well. After all, small businesses have shareholders too. 

A PPM is, in simple terms, a way to raise funds without going through the SEC’s burdensome registration process. Instead, you go directly to potential investors. This is a very common route for small businesses, even ones with pretty big budgets. For our Chicago-area readers, some of the city’s most famous and lucrative restaurants, such as Chicago Cut, are actually owned by a small group of shareholders. 

To raise money through a PPM, entrepreneurs can make use of Regulation D, Sections 504, 505, and 506, depending on certain conditions such as the amount of money being raised. Section 504 is limited to fundraises of under $1,000,000, and so is unlikely to be useful for people hoping to open a typical cannabis business, especially a craft grow cultivation facility. For most entrepreneurs, they’re going to be raising money from Accredited Investors.

  1. Accredited Investors & PPMs

Regulation D sets out the definition of an accredited investor. Different kinds of institutions (banks, LLCs, trusts) can be accredited investors, but in general you’re talking about wealthy individuals. These are individuals or couples who meet the following criteria:

  • earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
  • has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence and any loans secured by the residence (up to the value of the residence)).

Private placements are risky by their nature- these are brand new companies fundraising with relatively little government oversight. Investors could very easily lose everything. That’s why it’s so important that accredited investors be sophisticated and financially capable of absorbing the full loss. A typical PPM doesn’t require much information from an accredited investor. They simply have to certify that they meet the criteria. Some entrepreneurs may want to get independent verification, such as bank statements or CPA letters, but that’s not necessary to meet the requirements of Regulation D.

 

  • Why Should I Try A PPM?

 

Starting a business is hard. We just finished submitting all of our clients for the State of Illinois’s competitive cannabis cultivation and transporter application process, and boy did we learn a lot. Your average craft grow facility can cost upwards of $4,000,000 to fully build out. Worse yet, many traditional banks are still reluctant to work with cannabis clients.

The PPM bypasses regulatory hurdles and allows you to go directly to individuals who want to get involved in the industry. These can be people in your community who you know, who have the money but don’t know how to get involved. Accredited investors can be wealthy lawyers, bankers, restauranteurs, real estate brokers, or any number of people who are simply your friends and neighbors.

We’ve put together a PPM package for our clients to help them get started in their entrepreneurial pursuits. The best part about a PPM is that it is highly customizable. You can sell ten shares at $300,000 each, a hundred shares at $10,000 each, or nearly any combination that best suits your needs. Moreover, you can raise money in multiple rounds. We’ve designed our package so that investors can contribute a small, initial sum to help cannabis entrepreneurs finance their application, with the second, larger round contingent on the company actually being awarded the license.

There are countless other ways to customize a PPM to suit your needs and the desires of the investors your hoping to recruit. If you’ve got a plan and a vision, but you don’t quite have the capital, a PPM could be just the solution you need.

Private Placement Memorandums Are Not General Solicitation 

A private placement, unless it is using 506(c), you do not solicit in general to people to raise the money. It is a private placement memorandum – it is a private offering of an ownership stake in your company. So it means that you have a few investors. Your first meeting is a general meeting to get to know if your investor is right for you.  Then you can follow up with them if they are interested in learning more. Often times your PPM includes investment from friends, family, close network connections that you and your business may have.  

David Silvers

David Silvers

Regulatory Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.
R. Martindale

Need A Business Lawyer?

Call our law offices with your legal questions for help on:

  1. real estate contracts
  2. business contract disputes
  3. Shareholder litigation
  4. cannabis business
  5. fraud actions
  6. mechanic's liens

 

REACH US BY EMAIL




316 SW Washington Street, Suite 1A
Peoria, Illinois 61602

Phone: (309) 740-4033 || Email:  tom@collateralbase.com


150 S. Wacker Drive, Suite 2400,
Chicago IL, 60606 USA

Phone: 312-741-1009 || Email:  tom@collateralbase.com


316 SW Washington Street, Suite 1A
Peoria, Illinois 61602

Phone: (309) 740-4033 || Email:  tom@collateralbase.com


150 S. Wacker Drive, Suite 2400,
Chicago IL, 60606 USA

Phone: 312-741-1009 || Email:  tom@collateralbase.com

Practicing Law Without A License

Practicing Law Without A License

Practicing Law Without A License

Practicing Law Without A License

Practicing law without a license is a terrible idea that happens to some professionals, consultants or real estate agents may go over the line.

Be careful when carrying out your professional relationships and know where the line is for what your jurisdiction considers the unauthorized practice of law.  

In this article – we cover when some professional may enter into the unlicensed practice of laws and how to avoid it.

Unauthorized Practice of Law

Illinois, like all states, prohibits the practice of law by individuals not admitted to practice in the state. Illinois sets this forth in the Attorney Act, 705 ILCS § 205/0.01 et seq. Section one of the Act provides that:

“No person shall be permitted to practice as an attorney or counselor at law within [Illinois] without having previously obtained a license for that purpose from the Supreme Court of this State[.]”

The Illinois State Bar Association provides a wealth of Ethics Opinions on this topic. 

The Illinois Supreme Court has long held that the practice of law involves giving advice or rendering of services which require the use of legal skills or knowledge. People ex rel. Illinois State Bar Assoc. v. Schafer, 404 Ill. 45, 87 N.E. 2d 773, 776 (1949). That is, the “practice of law” is much more than simply going to court or representing someone in litigation. Here are just a few samples of activity which constitutes the “practice of law” in Illinois:

  1. Representing someone in an arbitration, even if the arbitrators aren’t lawyers (ISBA Opinion No. 12-17)
  2. Assisting or advising someone in completing corporate documents, even documents provided by the Secretary of State (ISBA Opinion No. 95-7)

Representing someone in a property tax appeals in many Illinois jurisdictions (In re Yamaguchi, 118 Ill. 2d 417, 515 N.E.2d 1235 (1987)

What Crosses the Line for Unauthorized Practice of Law?

The line for unauthorized practice can get especially blurry with high volume practices like residential real estate and consumer bankruptcy, in which lawyers rely heavily on paraprofessionals to process a large volume of often duplicative paperwork. The important distinction for these kinds of practices is that non-lawyers can perform administrative tasks like simply filling out information (names, addresses, etc.), but once they start making changes to the forms themselves, they may be stepping over the line and into unauthorized practice. This risk is especially serious for lawyers working in high volume practices, and lawyers who work frequently with other professionals like accountants and financial planners.

Here are some simple tips for staying on the safe side of the law.

  1. ALWAYS ask first. If you have any questions as to whether sometimes constitutes the practice of law, then ask. Lawyers should foster a culture in which paraprofessionals never hesitate to err on the side of caution.
  2. Let your clients know. Make sure they are clear on what kind of services they are receiving, and make sure there’s no confusion as to who is and is not a lawyer. If you work with another professional services firm, make sure to use distinct letterhead.
  3. Create clear Roles, Responsibilities, and Expectations (RR&E, in business lingo). Administrative staff should understand that they’re doing administrative tasks. E.g., they might be filling out information in a form, but they should not be drafting forms.
David Silvers

David Silvers

Regulatory Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.
R. Martindale

Need A Business Lawyer?

Call our law offices with your legal questions for help on:

  1. real estate contracts
  2. business contract disputes
  3. Shareholder litigation
  4. cannabis business
  5. fraud actions
  6. mechanic's liens

 

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Illinois Hemp Lawyer

Illinois Hemp Lawyer

Illinois Hemp Lawyer

Final Illinois Hemp Rules Released

 

Our Illinois Hemp Lawyers have written extensively on the first new agricultural commodity of the 21st century – hemp – over on our sister website focusing on our cannabis law practice – www.CannabisIndustryLawyer.com.

Illinois hemp Lawyer

Illinois hemp application bot

Illinois Hemp Farmers & Processors Need a Business Lawyer

For answers on the confusing term “agent”  discussed below – you can find the 2nd Notice Filing and Responses to Public Comments – Linked Here. 

Call Cannabis Attorney Thomas Howard at (309) 740-4033.

Want to Get a Hemp License

24/7 we answer the phone – and follow up quickly

Thomas Howard

Thomas Howard

Peoria Hemp Lawyer

Whether you’re growing and processing your first crop of hemp, or your 4th, we can help you in Illinois.

Welcome to the Collateral Base – Attorneys for Business & Cannabis, with litigation experience in secured transactions and commercial banking litigation in all over Illinois, with offices in Chicago and Peoria.

Counties: Peoria, Cook, McLean, Woodford, Tazewell, Knox, Henry, Rock Island, Fulton, LaSalle, Bureau, Mason, Logan, Sangamon, Macon, Woodford.

Cities: Peoria, Chicago, Pekin, Morton, Eureka, Bloomington-Normal, Springfield, Rock Island, Princeton, Ottawa, Lewistown, Galesburg, Monmouth.

Final Illinois Hemp Rules Released

Approximately one month after the public comment period ended for the first draft of the Illinois Hemp Regulations, the State has released its final version.

Now you can read them yourself

– Hemp Rules Link

We are going to discuss the new rules, which could be the final rules.  Currently, the State calls them the Industrial Hemp Rules With Second Notice Edits.

For more about the procedure of releasing regulations, or rules, after a law is passed – watch the video above.

Illinois Hemp Application Rules

In Illinois, two main hemp applications are covered by the rules – the cultivators’ license, and the processors registration.

The first draft of the rules required any person that either grew (cultivated) or manufactured (processed) hemp needed a license.

However, the first draft of the Rules did not make it clear if each and every employee of the company growing or processing hemp required a separate license.

Think if each and every employee at the local bar required a liquor license – how much more expensive would your drink order become?!

But, unlike your drink order, CBD rich hemp cannot make you intoxicated.  So when reading the newly revised rules.  We caught the attention of a few new terms and what they may mean.

New Changes to Hemp Rules

The newly added terms in the Hemp rules are in red line – and one of them is the new term of art – an “agent.”

An “Agent” is :

“Agent” means any family member, employee, contracted employee, or farmhand of a licensed or registered hemp cultivator or processor.

This is a new term under the rules.  We did not use the red-line version right here, but if you look at the rules link – you will see it in red. This new “Agent” term creates a very burdensome and expensive reading of the rules.  Let’s explain.

Section 1200.20 General Provisions

The general provsions of Illinois Hemp’s regulations provides that:

No person shall cultivate (or process) industrial hemp in the State without first receiving an Industrial Hemp Cultivation License (or registration to process) from the Department.

The next questions is, okay, if each person requires a license or registration to either grow or process hemp in Illinois, then how is “Person” defined under the regulations.

A “Person” defined under Hemp Regulations in Illinois.

You can find the answer in the definitions section – a “Person” is defined as:

“Person” means any individual, partnership, firm, corporation, company, society, association, the State or any department, agency, or subdivision thereof, or any other entity, or the agent thereof.

Does each Employee Require a Hemp License or Registration?

Illinois hemp rules second draft

WTF does that mean?

Because each “person” that handles or grows hemp requires a license or registration to do so in Illinois, and the definition of the term “person” includes the newly defined term “Agent,” then we have a legal conclusion confronting us.

Does each employee – or even family member – count as an agent, which is a person – who all require a license or registration to either grow or process hemp?

Agent should me one license (or registration) per business location.  If you read the comments to why they added the term “agent” it was to help address the issue of licensing all employees and provide clarity – but as you see it does not happen by only reading the rules, you also have to read the commentary on the rules to get the intent of the agency.

How to Start Your Illinois Hemp Application

The vast majority of the information required to complete your business’ Illinois hemp license application is available online. 

We wait for Illinois to produce their official form of application to be able to help our clients make sure their application is correct.

We are also in close contact with the State of Illinois regarding the scope of the licenses and registrations to see if the newly introduced terms may come onto the scene.  For now it appears that Illinois will be starting to take hemp applications very soon.

So call now to start your Hemp application – right now.

 

Want to Get a Hemp License?

We are helping businesses like yours get into the fast growing Illinois Hemp market.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.

R. Martindale

Need A Business Lawyer?

Call our law offices with your legal questions for help on:

  1. real estate contracts
  2. business contract disputes
  3. Shareholder litigation
  4. cannabis business
  5. fraud actions
  6. mechanic's liens

 

REACH US BY EMAIL