Section 1000.40  Operation of a Cultivation Center

a)         Only a cultivation center that has been issued a permit by the Department under the provisions of the Act and this Part shall own and operate a cultivation center facility.

b)         A cultivation center, including each principal officer, board member, agent and employee shall not:

1)         produce or manufacture cannabis in any place except in those areas designated in the permit;

2)         sell, deliver, transport or distribute cannabis from any place except its permitted cultivation facility;

3)         produce or manufacture cannabis for use outside of Illinois;

4)         sell, deliver, transport or distribute cannabis to any person or entity other than a dispensary organization registered with the DFPR, or a testing laboratory approved by the Department;

5)         enter into an exclusive agreement with any dispensary facility;

6)         refuse to conduct business with any dispensary facility that has the financial ability to pay for the medical cannabis and is licensed with the DFPR on the same terms and conditions as other dispensary facilities with whom the cultivation center is dealing;

7)         either directly or indirectly discriminate in price among different dispensary organizations that are purchasing a like grade, strain, brand and quality of cannabis or cannabis-infused product.  Nothing in this subsection (b)(7) prevents pricing medical cannabis differently based on differences in the cost of production, the quantities sold, such as volume discounts, the way the products are delivered, or delivery costs relative to distance travelled;

8)         accept, solicit or offer any form of remuneration from or to a physician;

9)         allow a physician to conduct a personal physical examination of a patient for purposes of diagnosing a debilitating medical condition at the permitted location;

10)        allow a physician to hold a direct or indirect economic interest in the cultivation center if the physician recommends the use of medical cannabis to qualified patients or is in a partnership or other fee or profitsharing relationship with a physician who recommends medical cannabis;

11)        allow a physician to serve on the board of directors or as an employee of the cultivation center; however, a cultivation center may hire a physician as an independent contractor provided the physician's involvement in the cultivation center is limited exclusively to designing or conducting non-proprietary medical research or studies;

12)        accept referral of patients from a physician;

13)        allow a physician to advertise at the cultivation center; or

14)        accept any returned product unless it is as a result of a Department approved product recall.

c)         A cultivation center permit shall allow the permittee to operate at a single cultivation center location.

d)         A single entity shall not be granted more than three cultivation center permits.  If a qualified applicant has been selected for more than three permits, the applicant shall notify the Department within 48 hours after notification, on the form provided by the Department, in which three Districts it chooses to receive permits and operate cultivation centers.  No person shall be an owner, partner, officer, director, shareholder, or member of more than three permitted cultivation centers.  No corporation, partnership, limited liability partnership, limited liability company, or other entity or subsidiary thereof shall be an owner, principal officer, partner, shareholder, or member of more than three permitted cultivation centers.  In the event that an entity is awarded a permit in a District and that entity forfeits that permit, the permit shall be awarded to the next highest scoring qualified applicant.

e)         A permitted cultivation center may not be located within 2,500 feet of the property line of a pre-existing public or private preschool or elementary or secondary school or day care center, day care home, group day care home, part day child care facility, or an area zoned for residential use. (Section 105 of the Act)

f)         A permitted cultivation center is not subject to prosecution; search or inspection, except by the Department, Department of Public Health, or State or local law enforcement under Section 130 of the Act; seizure; or penalty in any manner, or be denied any right or privilege, including but not limited to civil penalty or disciplinary action by a business licensing board or entity, for acting under the Act or this Part to: acquire, possess, cultivate, manufacture, deliver, transfer, transport, supply, or sell cannabis to registered dispensing organizations. (Section 25 of the Act)

g)         A cultivation center shall provide evidence of financial responsibility, which shall be payable to the Department in the event the cultivation center fails to comply as follows: complete construction and begin production within six months after the permit has been issued; maintain production for any reason for more than 90 consecutive days after it has completed construction of the facility; or continue to operate the cultivation center in a manner that provides an uninterrupted supply of medical cannabis to licensed dispensaries during the term of the permit, sufficient enough to allow the licensed dispensaries to supply their registered qualifying patients with an adequate supply of medical cannabis. 

1)         Evidence of financial responsibility shall be provided by one of the following:

A)        Establishing and maintaining an escrow account in a chartered financial institution in Illinois in the amount of $2,000,000, except as otherwise provided in Section 1000.60, with escrow terms, approved by the Department, that it shall be payable to the Department in the event of circumstances outlined in this subsection (g).  A financial institution may not return money in an escrow or surety account to the cultivation center that established the account or a representative of the cultivation center unless the cultivation center or representative presents a statement issued by the Department indicating that the account may be released; or

B)        Providing a surety bond naming the cultivation center as principal of the bond, upon terms approved by the Department, in the amount of $2,000,000, except as otherwise provided in Section 1000.60, with terms approved by the Department that the bond defaults to the Department in the event of circumstances outlined in this subsection (g).  Bond terms include:

i)          The bond must be written by a surety company authorized and licensed by the Illinois Department of Insurance.

ii)         The business name and registration number on the bond must correspond exactly with the business name and registration number in the Department's records.

iii)        A copy of the bond must be received by the Department within 15 business days after notification of selection for a permit.

iv)        The bond shall not be canceled by a surety on less than 30 days' notice in writing to the Department.  If a bond is canceled and the cultivation center fails to file a new bond with the Department in the required amount on or before the effective date of cancellation, the cultivation center's permit shall be revoked.  The total and aggregate liability of the surety on the bond is limited to the amount specified on the bond.

2)         A cultivation center will not be held in default should the failure to comply be the direct result of an event or effect that cannot be reasonably anticipated or controlled, such as an act of God or nature and not the result of a lack of good faith effort. 

h)         The cultivation center shall provide documentation that it meets all federal, State and local building, zoning and fire codes and that all local ordinances are met.

i)          The use of pesticides as part of the growing process by a cultivation center must be in compliance with the provisions of Section 1000.470.

j)          Improper use of pesticides in the cultivation of a batch (Section 1000.470) may result in the destruction of the batch and denial, suspension or revocation of the cultivation center's permit.