Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
A little slower news cycle as we move towards wrapping up the year. Please make sure you have our holiday party marked on your calendar and please RSVP if you can. We’ll meet next Wednesday, the 13th from 4:30 to 6:30 at the Renaissance Center, 214 N. Ottawa St. in downtown Joliet. https://members.jolietchamber.com/events/details/2023-annual-holiday-reception-6886
A reminder that we will be hosting a webinar TOMORROW, December 7th from 8:30 to 10:00 AM on the main subject of the Paid Leave for All Workers Act along with a Proposed Exempt Salary Overtime Threshold and the NLRB’s Joint Employer Rule. I can’t stress enough the importance of making sure your policies are updated for the new Paid Leave mandates.
For more information and to make a reservation, use this link: https://members.jolietchamber.com/events/details/2023-december-legislative-coffee-with-scott-cruz-6890
*Government Affairs Roundup brought to you by CITGO & Silver Cross Hospital*
Governor Pritzker Announces $13 Million Investment in Job Training and Economic Development Program
Governor JB Pritzker and the Illinois Department of Commerce and Economic Opportunity (DCEO) announced an additional $13 million investment in the Job Training and Economic Development Program (JTED) for workforce training and wrap-around services that will bolster equitable workforce recovery for Illinoisans struggling to gain meaningful employment. As part of Illinois’ workforce recovery efforts, JTED grants focus on helping increase employment among workers and industries hardest hit by COVID-19. Grantees will be selected through a competitive Notice of Funding Opportunity (NOFO) process.
“As we continue to bounce back from the pandemic, my administration remains committed to supporting our workforce and the industries that employ them,” said Governor JB Pritzker. “Today, I am proud to announce that we are investing another $13 million into DCEO’s Job Training and Economic Development Program—building on our first round of funding to serve even more Illinoisans with resources, services, and trainings, while centering equity at every turn. From healthcare and tourism to manufacturing and agriculture, we are ensuring that every industry has the staff they require to thrive and that every resident, no matter their background, has the opportunity to take part in our nation’s number one workforce.”
In the second round of the program, JTED will address the economic impacts experienced by employers and individuals who are underemployed, unemployed, or underrepresented, including youth who have one or more barriers to employment which are identified as risk factors. Priority populations include immigrants and refugees, justice-involved individuals, and rural residents.
“The second round of JTED program grants goes directly to residents that need our support the most, and we must ensure all Illinoisans benefit from a robust recovery from the COVID-19 pandemic,” said Lt. Governor Juliana Stratton. “These funds address labor shortage challenges from the pandemic so all of our residents can participate in an equitable workforce for Illinois.”
JTED funding will continue to focus on hard hit sectors which have seen a labor shortage since the onset of the pandemic – such as manufacturing, agriculture, information technology, transportation distribution and logistics, architecture and construction, healthcare, and hospitality and tourism.
“The JTED program has helped thousands of Illinois families who were hit hardest by the COVID-19 pandemic, and the second round of the program will continue to assist Illinoisans who need it the most,” said DCEO Director Kristin Richards. “Illinois is known for its world-class workforce, and DCEO is committed to supporting an equitable workforce recovery by providing support services to underemployed, unemployed and underrepresented communities.”
The State’s JTED model boosts access to education, training and support services needed for vulnerable residents to successfully re-enter the labor force. Additionally, JTED offers flexible funding through Barrier Reduction services for individuals that have emergency costs for basic needs.
Eligible applicants include employers, private nonprofit organizations, federal Workforce Innovation and Opportunity Act administrative entities, Community Action Agencies, industry associations, and public or private educational institutions that have demonstrated expertise and effectiveness in administering workforce development programs.
Eligible entities can apply for grants between $250,000 to $750,000. Applications will be accepted until January 10 at 5:00 p.m. To view the NOFO and apply for the grant, please visit the DCEO website.
To help applicants prepare to apply for funding, DCEO will be holding a webinar from 10:00 a.m. – 12:00 p.m. on December 13. Interested parties are also encouraged to reach out to CEO.GrantHelp@illinois.gov for application assistance.
Through the first round of the JTED program, the State of Illinois invested $20 million in 44 community-based organizations that are currently serving nearly 1,900 unemployed, underemployed, or underrepresented Illinoisans, with a special training focus on industries hardest-hit by the pandemic.
Latest Report from COGFA on Pensions
Illinois’ unfunded pension liabilities increased by approximately $2.5 billion this year, reaching a total of $142.3 billion. Although this figure is lower than the 2020 peak of $144.2 billion, it reflects the challenges posed by poor investment returns in the initial year of the COVID-19 pandemic.
In 2021, the state experienced a reversal of fortunes, witnessing a significant reduction in liabilities due to returns that exceeded expectations. However, these returns have since stabilized. The annual pension report from the Commission on Government Forecasting and Accountability reveals that the state’s five pension funds are currently 44.6 percent funded. This implies that the funds have the capacity to cover less than half of the total owed if all pensioners were to claim benefits simultaneously.
While this funding ratio is indicative of the pension funds’ financial well-being, it doesn’t necessarily reflect their ability to make timely payments to current pension recipients. The state continues to disburse pension checks promptly. Approximately 20 percent of the state’s discretionary spending each year goes toward pension payments.
Criticism has been directed at the 1995 state law governing pension payments, with a common complaint being its deviation from accounting best practices. The funding plan aims to achieve 90 percent funding by 2045, rather than full funding. COGFA anticipates the state’s contribution for the fiscal year 2025 to be $11.3 billion, up from around $10.9 billion. However, to be “actuarially sufficient” and prevent further growth in unfunded liabilities, an additional $4.8 billion would be required.
COGFA reports that since 1996, approximately 48 percent of the pension funds’ unfunded liabilities can be attributed to payments falling short of actuarial requirements. Despite the state allocating an extra $700 million to its pension systems beyond legal obligations in recent years, this has not been adequate to halt the growth of unfunded liabilities.
Nevertheless, the additional payments, coupled with an optional buyout program expediting pension benefit disbursements, have alleviated some of the upward pressure on unfunded liabilities.
Read the report: COGFA’s Special Pension Briefing
Cannabis Industry in Illinois
After four years of legalized recreational marijuana sales in Illinois, the industry has undergone significant changes, both positive and negative. Major corporations in the marijuana sector are encountering challenges and seeking support from Washington, while numerous small businesses are defying odds and forging ahead to establish new dispensaries and cultivation facilities.
Following delays, new license holders are entering the market at a robust pace, contributing to increased diversity in industry ownership and a reduction in Illinois’ previously high marijuana prices. The state now boasts 173 pot shops, up from 113 a year ago, with regulators anticipating that the number could reach 190 by year-end.
The addition of new dispensaries is crucial for the ongoing expansion of the legal marijuana business, which generated $452 million in tax revenue for the state in the fiscal year ending June 30. Diversifying operators is also essential for fulfilling promises of social equity integral to the rationale behind legalizing recreational marijuana. While demand remains robust, a decline in prices has slowed overall industry revenue growth, making products more affordable for consumers.
Revenue growth had begun to stagnate in the spring before the opening of more stores. Recreational marijuana sales statewide increased by 5% to $1.3 billion through October compared to a year earlier, a slowdown from the 14% growth recorded during the same period in 2022. This decline in revenue growth is attributed to falling marijuana prices, competition from other states, and cultivators vying to supply new stores.
Beau Whitney, head of cannabis research firm Whitney Economics, estimates combined sales of medical and recreational marijuana in Illinois will reach around $1.85 billion this year, lower than the potential $2.4 billion, citing licensing litigation as a significant factor impeding sales.
Despite these challenges, the number of products sold in recent months has increased by approximately 20% compared to a year ago. Illinois’ wholesale marijuana prices are now the fourth highest in the country, according to Cannabis Benchmarks, a notable decrease from the state’s previous status as having the highest pot prices nationwide.
Erin Johnson, Illinois’ chief cannabis regulator, acknowledges significant progress in the industry over the past year, citing a record number of products sold and decreasing prices. However, challenges persist in achieving social equity goals and attracting sufficient funding across the industry.
Illinois, being home to major cannabis companies, including three of the five largest publicly traded ones, is closely observed by the industry. The state’s experiment in social equity, aimed at diversifying the industry and addressing the impact of the war on drugs, has faced both praise and criticism for its perceived slow and complicated implementation.
Funding remains a significant challenge for both established players and new entrants due to federal marijuana illegality preventing access to traditional loans. Although signs of increased capital availability are emerging, higher interest rates in the commercial market make borrowing more expensive for weed companies, limiting the pool of cannabis lenders and investors.
Illinois legislators have recently approved $40 million in loans for new cannabis companies, but the funds have not yet been disbursed. Despite challenges, there are optimistic signs of progress, with the industry adjusting to market dynamics and regulatory conditions, all while navigating the complex landscape of social equity and financial constraints.
Betting on tax relief
Once again, attention is turned towards Washington, not for legislative action but for intervention from regulators. President Joe Biden has instructed regulators to reclassify marijuana as a less hazardous controlled substance, a move anticipated by many in the industry within the coming months.
A potential shift of marijuana from Schedule 1 to Schedule 3 status holds the promise of reduced taxes for cannabis companies. At present, these companies cannot deduct day-to-day expenses like traditional businesses. This change is expected to have a more significant impact than the banking reform legislation pursued by the industry for years. However, the fate of the SAFER Banking law, once promising, now appears uncertain amid the political turmoil in the U.S. House, dampening some of the optimism for the industry’s future.
The stock market saw a boost in September following the Department of Health & Human Services’ recommendation for rescheduling, but prices have since retraced. Verano Holdings’ stock has risen by 38% this year, Green Thumb Industries’ shares are up by 21%, and Cresco Labs’ stock has declined by 6%. Despite recent gains, all three stocks remain at least 50% below their levels from two years ago.
Illinois, aligning with several other states, has provided some relief by allowing cannabis companies to deduct business expenses from state taxes, potentially saving them millions annually.
The roller-coaster effect on publicly traded companies has reverberated through private firms, leading to a decline in valuations. This downturn has impacted deals, with planned sales, such as Dispensary 33’s attempt to sell two Chicago pot shops to Miami-based Ayr Wellness, falling through. State records indicate a decline in the transfer of Illinois dispensary licenses, dropping from 17 and 15 licenses sold in the preceding two years to just five in the fiscal year ending June 30.
The potential rescheduling of marijuana is seen as having the most immediate impact, potentially leading to increased business exits. Without such regulatory changes, many small companies may struggle to survive.
Simultaneously, in Springfield, the cannabis industry is advocating for regulations to restrict the sale of competing hemp-based products, particularly Delta 8. Fourteen states, including Colorado and New York, have already banned Delta 8. Industry proponents in Springfield emphasize the need to regulate intoxicating hemp, highlighting its direct competition with social-equity licensees. There is a belief that the legislature has the inclination to regulate intoxicating hemp, marking an ongoing regulatory push in the state.
Illinois Back to Business New Business Grant Program (B2B NewBiz)
Illinois B2B NewBiz will provide financial relief to businesses that started during the pandemic in the industries most impacted by the pandemic. Businesses that started during the pandemic have not been eligible for state grants and most federal emergency support provided for emergency relief to small businesses thus far.
Eligibility Requirements
To be eligible for a grant award under Illinois B2B NewBiz, for-profit businesses and nonprofit organizations must meet all the criteria listed below:
- Started operations between January 1, 2020, and December 31, 2021.
- Had gross receipts of at least $25,000 and up to $20,000,000 in 2021 (annualized if started during 2021).
- Currently active operations in Illinois.
- Have not received a Back to Business (B2B) grant prior to 2023.
- Business Interruption Grant (BIG), Back to Business (B2B) Grant issued prior to 2023, Shuttered Venue Operators Grant (SVOG), or Restaurant Revitalization Fund Grant (RRF).
- Must meet one of the following two criteria:
- The business or nonprofit is in a priority industry as defined for the previous Back to Business program
- A list of priority industries and their definitions can be found here.
- The business is majority owned by an individual or individuals that became eligible for and received unemployment insurance benefits – including from Pandemic Unemployment Assistance (PUA) – between March 13, 2020, and the date the business began operations.
- The business or nonprofit is in a priority industry as defined for the previous Back to Business program
Application Window Opens: November 30, 2023, at 9:00 a.m. CT.
Application Window Closes: January 11, 2024, at 11:59:59 p.m. CT.
Full information and forms can be found at https://b2bnewbiz.com/
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
815.727.5371 main
815.727.5373 direct