What happens when a marijuana social equity permit holder dies?

As the U.S. legal cannabis industry enters its second decade, tricky questions are arising that policymakers did not necessarily anticipate when crafting the rules governing the $32 billion market.

Among these, prompted by a situation in Illinois involving stores operating under the prominent Cookies brand: What happens when a marijuana social-equity permit holder dies?

Perhaps more to the point for some advocates: What should happen to achieve cannabis social-equity’s goals of a diverse market in which the people who suffered under the drug war enjoy the benefits?

Answers could come thanks to Illinois, where the social-equity permit holder for three marijuana stores using the prominent Cookies brand died at age 73 in December.

Exactly what happens next is not immediately clear, but the resolution could shape policy and determine the outcome of future scenarios, according to law professors and observers who reviewed details at MJBizDaily’s request.

“As state social equity programs mature, issues like this will only become more common,” said William Garriott, a law professor who chairs the Law, Politics, and Society Program at Drake University in Des Moines, Iowa.

“The transferability of social equity licenses is one of the most contentious issues after the licensing process itself.”

Question of cannabis social equity retail store inheritance

State records show that John Rushing, whose obituary describes him as a Marine Corps veteran of the Vietnam War and a resident of Palatine, a suburb of Chicago, was the principal of Project Equity Illinois, Inc.

In August 2022, Illinois state regulators awarded Project Equity Illinois three social equity retail permits.

These permits were later used to open Cookies-branded cannabis stores in Bloomington, Peoria and Pontoon Beach.

Each store later won a $240,000 Direct Forgivable Loan from the state in August 2024.

It’s not publicly known how Rushing, who was white, qualified for a social-equity permit.

The fate of the business is also not publicly known.

State regulators declined to answer questions from MJBizDaily about a specific licensee.

In response to questions, a spokesman for the state Department of Financial and Professional Regulation (DFPR), one of the state agencies tasked with overseeing Illinois’ $2 billion industry, referred MJBizDaily to relevant sections of state law.

A public records request filed last week was not fulfilled in time for publication.

Reached via cell phone last week, James Rushing, one of John Rushing’s middle-aged sons, cancelled a Monday interview and declined to participate in this article.

And though it appears that a successor must also qualify for a social-equity permit, state law is vague on the question, Garriott said.

Other observers said there’s nothing in state law that forbids a social-equity retail permit from being sold to anyone – including someone who does not qualify for an equity permit themselves.

“There are a lot of details that need to get worked out,” said Jonathan Caulkins, a professor of  public policy at Carnegie Mellon University who frequently publishes on cannabis.

“They are important and have to be resolved,” he added.

“But back when people were first thinking about cannabis legalization, this and 101 other ‘details’ were not on any one’s radar screen.”

Past deaths disqualified marijuana social equity applications

Illinois launched adult-use marijuana sales in January 2020 at existing medical cannabis dispensaries.

Some observers credit the state’s limited-license model for MMJ for helping launch major multistate operators such as Cresco Labs and Green Thumb Industries, both of which are headquartered in Chicago.

Starting the state’s cannabis social equity program took longer.

In some cases, it took so long that the qualifying applicant died before licenses were awarded, said Peter Contos, deputy director of the Cannabis Equity Illinois Coalition, a Chicago-based advocacy organization.

In some of those cases, regulators reacted swiftly: Without a qualifying applicant, the applications were invalid, according to Contos.

“It was incredibly strict,” he told MJBizDaily.

“But this is the first time I’ve heard of” a license-holder dying after opening for business, he said.

Other critics have expressed frustration at how difficult it’s been to obtain a social-equity permit in Illinois despite relatively lax qualifications.

Comparatively easy to qualify for marijuana social equity in Illinois

In the case of John Rushing and Project Equity, his family would also qualify for a social-equity permit if he’d been arrested for cannabis.

That’s because Illinois’ requirements are loose compared to other states, observers told MJBizDaily.

Though it’s generally accepted that social-equity programs are meant to create ownership opportunities for racial minorities, laws crafted to benefit specific races would not survive constitutional challenges.

In Illinois, an individual can qualify for a social-equity permit if they’ve lived for five of the past 10 years in a designated “disproportionately impacted area” or if they or a “parent, child, or spouse” have a cannabis-related arrest or conviction.

But there’s also a way for a business owner to qualify via their workers.

According to state law, if an applicant has more than 10 full-time employees, and more than half of those workers meet one of the above criteria, the applicant would also qualify.

Is the end nigh for marijuana social equity?

Robert Silverman, a professor of urban and regional planning at the University of Buffalo in New York, who’s published on cannabis social equity, also reviewed the Illinois Cookies situation at MJBizDaily’s request.

“The idea… is to create wealth for the person who gets the permit through operating the business as a form of restitution,” he said.

In his analysis, one of Rushing’s heirs will likely inherit the business – but then they’d have to apply for a new social-equity permit or sell the business to someone with a permit if they don’t qualify.

But the situation also raises the issue of when cannabis social equity programs will be determined no longer necessary, he said.

And that could be within the next few years – whether it’s because states cede to pressure from the Trump administration to end social-justice-minded DEI initiatives or because there are too few people left who qualify.

“If you look at the argument for the (social equity) permit law, it is by definition a temporary mechanism to give restitution to someone impacted by past criminalization of marijuana,” Silverman told MJBizDaily.

“As that population ages out, there won’t be anyone around to apply for SE permits, and future successors and new dispensary operators will just get regular permits.

“I would think that most states will just say the SE permits are no longer needed in five or 10 years and argue that the target population for them is no longer around.”

 Chris Roberts can be reached at chris.roberts@mjbizdaily.com.