Safeguards Required to Obtain a Dispensary License in Illinois

Learn about the safety procedures needed to obtain a dispensary license in Illinois

July 29, 2022
Safeguards Required to Obtain a Dispensary License in Illinois
Written by
Blitz Insurance

Illinois is both a medical and a recreational cannabis state. With 110 licensed dispensaries and more than 185 licensed recreational stores, a substantial amount of cannabis is moving around, translating into a considerable amount of money. Both of which require protections under state dispensary regulations. 

Do you abide by all security regulations required to be licensed as a dispensary in Illinois? As a dispensary or adult-use retailer, what safeguards do you legally need to have in place to protect your products, profits, and people? 

We look at what security measures you'll need to have to secure a license, qualify for insurance, and operate a legal dispensary in Illinois.

Security Measures for Dispensary License Application In Illinois 

In the summer of 2019, the Cannabis Regulation and Tax Act (CRTA) of Illinois laid out the security requirements for adult-use retailers and dispensaries, beginning with the application process.

An applicant's proposed business plan must spell out the proposed security plan including, at the very least, the following points:

  • A complete outline of how deliveries will take place, including the receipt of manifests and the security protocols that will be followed to prevent theft, diversion or other losses related to the drop-off (delivery) of goods at the retailer in question 
  • The on-site security plan that will monitor the physical space, including both the products and currency held on-site, which must protect patients, consumers, staff, and inventories from diversion, theft, or loss
  • Specifics on the restricted areas at the dispensary, including how access will be restricted to only those parties legally allowed to enter (department inspectors, security guards, delivery people, and other professionals 

The application has to have all the fine details ironed out, including the location of video cameras, motion detectors, and servers. 

You'll also need to discuss on-site video storage capabilities, any third-party security services you'll be using, and what alarm service provider you are contracted with.

All of which is to say, before you even apply, you need to have detailed security plans in place. In the simplest terms, these processes have to keep people (employees and customers), products (your inventory), and your cash assets safe from theft or loss. 

Security Strategy Plays into Dispensary Insurance in Illinois

Not only does Illinois make it clear what security measures your dispensary needs to have in place for licensing, but these are also necessary for insurance coverage. It goes hand in hand with your business plan and application.

According to the Chicago Tribune, recreational sales in Illinois accounted for $1.38 billion in 2021, with medical sales contributing an additional $1.8 billion. With millions of products sold to hundreds of thousands of consumers, there is no question that on-site and online security precautions are a primary concern for retailers — and that plays into risk management through insurance coverage.

A complete security plan, including alarms, properly locked restricted access areas, and video surveillance, helps safeguard against risk. Insurance is an equal — and required— part of this equation.

Is your dispensary covered? In Illinois, Blitz Insurance is an innovator in specialty insurance. We combine deep industry expertise and next-gen technology for faster, simpler, smarter specialty coverage. As a result, we're delivering streamlined cannabis dispensary insurance in Illinois and beyond.

Contact your local broker about becoming a Blitz partner today.

Limited and Restricted Access Areas

When it comes to protections for your physical space, most protocols cover access between restricted and limited access areas.

"Limited access area" means a building, room, or other area under the control of a cannabis dispensing organization licensed under this Act and upon the licensed premises with access limited to purchasers, dispensing organization owners and other dispensing organization agents, or service professionals conducting business with the dispensing organization. ILLINOIS ADMINISTRATIVE CODE 1290

For example, you'll have to install a locked door between the store entrance and the limited access area. During open hours, you must also keep all cannabis in an enclosed, locked room or cabinet. This is classified as a restricted access area.

After closing, you must then store all cannabis and currency in a reinforced vault room in the restricted access area. Take precautions to prevent unauthorized entry, through secure locks (electronic and manual) and surveillance. 

Ensure that all restricted access areas are carefully and clearly noted as such with signage. The law states that the text has to be at least one inch tall, declaring "Do Not Enter - Restricted Access Area - Authorized Personnel Only." 

Personnel and Restricted Access Areas

"Restricted access area" means a building, room or other contiguous area under control of the dispensing organization and upon the registered premises with access limited to dispensary agents only, where cannabis is stored, packaged, sold or processed for sale. ILLINOIS ADMINISTRATIVE CODE 1290

The only people who are allowed access to the restricted access zones under the law are authorized dispensing organization agents — your budtenders and management. You'll also have to maintain a daily entry log of anyone accessing currency or cannabis within the restricted access area. 

Does one of your staff know of the vault code or have an access key but doesn't always access the product? You'll need to keep a log for that information as well. No unauthorized personnel should have easy access to locks, passwords, or codes for restricted areas.

On-Site Security Systems

The requirements for your dispensary security system are particular, ensuring there are proper systems in place to "prevent and detect diversion, theft, or loss of cannabis, currency, or unauthorized intrusion."

Furthermore, whatever system you choose to install must be done by a licensed private alarm contractor. 

Your security system must include:

  • A perimeter alarm on all entry points, including glass break protection on perimeter windows
  • Security shatterproof tinted film on exterior windows
  • A failure notification system that provides an audible, text, or visual notification of any failure within five minutes of the incident
  • A duress alarm, panic button, and alarm, or holdup alarm and after-hours intrusion detection alarm, to notify the Public Safety Answering Point for the law enforcement agency in your jurisdiction

Regular testing is yet another requirement. The CRTA mandates monthly testing of the equipment and surveillance system.

The only people who should have access to the system and the recordings are those members of your team who are absolutely essential to their operation, law enforcement authorities, security system service personnel, and the Illinois Department of Financial and Professional Regulation.

Security Cameras and Associated Infrastructure 

Every dispensary must have an operational video surveillance system. It's so critical that if a technical issue shuts down the video feed, it's illegal to continue operations. 

What do you need to cover with video surveillance?

  • Safes
  • Vaults
  • Sales areas
  • Storefront
  • Parking lot
  • And any area where cannabis is stored, handled, dispensed, or destroyed

Set up cameras for clear facial recognition within the store (and entryways), and license plates in the parking lot.

What's more, the video is only as good as the video quality. You'll need to keep all interior and exterior lights in good working order, in compliance with the CRTA. How bright must they be? As per the rules, "wattage sufficient for security cameras."

Any landscaping that may interfere with the video stream needs to be cut back to ensure surveillance videos are usable. This includes trees, bushes, or other features that obscure the view of entrances, doorways, and windows.

Keep 24-hour surveillance videos for at least 90 days. If there has been a known theft, loss, investigation, or legal proceeding, you'll need to keep these records as long as necessary.

Illinois Dispensary Risk Management Through Security, Surveillance, and Insurance

In the state of Illinois, your dispensary must have a security plan and other appropriate safeguards in place. Even before licensing, it's a requirement for the application process. Need insurance? You'll also find that alarm systems and other on-site security measures are prerequisites for coverage.

From the products you sell to the people you serve, securing your dispensary with a variety of measures reduces the risks of operation. You protect the premises, profits, and product from theft, loss, and diversion, but you also ensure your customers feel safe as soon as they walk through your doors.

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