There are many advantages to using a lottery instead of a scored system if the number of cannabis licenses is capped. A lottery is a far more equitable, efficient, and cost-effective way of licensing.

SB 888 includes a three-step process, first for social equity applicants, then for everyone:

• First, a lottery is held. There is no onerous application required to enter it.
• Second, those who win the lottery complete an application to determine if they meet the requirements — such as if they qualify as social equity applicants and to ensure they don’t have fraud convictions. They then receive a provisional license.
• Third, each lottery winner has 14 months to secure financing, a location, zoning approvals, and to otherwise meet regulatory requirements for a final license.
  • If any “winner” does not qualify or decides not to move forward, another entrant will be randomly selected for the opportunity.

This approach has a number of advantages to a scored or competitive application system:

Avoid Wasting the Life Savings of Individuals Who Aren’t Selected — Competitive licensing systems require anyone wanting to operate a cannabis business to file lengthy applications with detailed proposals, which typically cost hundreds of thousands of dollars to craft. The vast majority of those applicants do not win licenses. Numerous individuals have lost their life savings putting together applications that were not approved. 

Ensuring Those Without Deep Pockets Have a True Opportunity — SB 888 seeks to create an equitable industry and build wealth in communities of color, not to squander it. Its approach avoids requiring any capital outlay for individuals who will not be allowed to operate cannabis businesses. Once lottery winners are selected, SB 888 includes provisions to assist with start-up funding and technical assistance.

Expediting the Licensing Process — Scored application processes tend to be beset by delays, sometimes for years. It takes a long time to review and score lengthy, detailed proposals, most of which will never be licensed. Only having to review materials from the licensees who are selected in a lottery and avoiding scoring allows for a quicker rollout, so that social equity applicants can more quickly build their businesses and see the benefits of legalization.

Reducing the Risk of Prolonged Litigation — While a lottery cannot completely eliminate the odds of litigation, a great deal of litigation has focused on how applications were scored. Allegations that the scoring was unfair grounded social equity licensing in Illinois to a halt, stalling the process by well over a year.

Reducing Licensing Costs — Reviewing hundreds of pages of applications and scoring them costs money and thus drives up regulatory  and licensing costs. SB 888’s approach allows the state to reduce unnecessary costs for both applicants and the state.

Promoting Fairness and Faith in the Process — Allegations of bias, corruption, and varying standards have plagued many of the scored licensing systems. Creating a lottery avoids the perception and the reality of favoritism and bias in who gets licensed.