a) Through the Cannabis Business Incubator Program, the Department may approve hosts that provide the following required services to a Social Equity Applicant intending to seek a license, or a licensee that qualifies as a Social Equity Applicant. All such services shall commence by March 31, 2020 and shall be substantially completed by March 31, 2021. The host shall:

1. 1) agree to provide incubation services to a Social Equity Applicant intending to seek a license, or a licensee that qualified as a Social Equity Applicant for at least one year. Those services shall include mentorship;

2. 2) provide a loan of at least $100,000, with the loan complying with the following conditions:

   1. A) the interest rate shall not exceed 12% and the repayment term shall be no less than 5 years, with the first payment being due no less than one year from the execution of the loan documents. If the host charges fees in connection with the loan, then the annual percentage rate of the loan shall not exceed 12%;
   2. B) if the Social Equity Applicant defaults on this loan, no penalties, fees, or costs shall be charged and the borrower's liability shall not exceed the principal balance and accrued interest; and
   3. C) securing this loan with a controlling interest in the Social Equity Applicant's license (whether by agreeing to use the license as collateral or requiring a majority equity pledge of the borrower's owners, or by any other mechanism to secure control over a license upon default under the loan) is strictly prohibited;
3. 3) in the event the host does not charge interest on the loan, hold no more than a 10% ownership interest in the licensee; and
4. 4) abide by all other statutory restrictions on ownership, including, but not limited to, those expressed in Section 15-30(k) of the Act.

h) Application Process

1. 1) Applications. Applications will be reviewed on a first-come, first-served basis, when the application is deemed complete in accordance with programmatic and application requirements.
2. 2) Those applications that have been received by the Department and are incomplete shall not be reviewed until a complete application is received. Receipt of an incomplete application will not reserve an applicant's position in the Department's review process.
3. 3) A staff review by the Department will be conducted to determine whether all the required information is contained in the application.

4. 4) The applications shall be reviewed for the presence and totality of the following elements:

   1. A) A comprehensive mentoring strategy to provide the incubated organization with assistance with:

      1. i) Development of business plans;
      2. ii) Marketing;
      3. iii) Networking;
      4. iv) Security plans;
      5. v) Product handling;
      6. vi) Design of physical space;
      7. vii) Real estate acquisition; and
      8. viii) Acquisition of capital beyond the loan, as required by subsection (a)(3).
   2. B) Loan interest charged.
   3. C) Any ongoing assistance to be offered to the Social Equity Applicant beyond the initial year of incubation.
   4. D) A schedule of fees and expenses that may be charged as part of the program.
   5. E) Any mentoring of Social Equity Applicants that was done prior to application should be reported in detail including any of the comprehensive mentoring strategy components under subsection (h)(4)(A).
5. 5) Length of Review. Provided that all the required contents of the application are complete and adequate, the Department will notify the applicant within 45 days after the receipt of the complete application of its preliminary approval or denial.

i) Preliminarily Approved Incubator Programs; Reporting and Final Approval. Incubator programs that receive preliminary approval shall provide semiannual reports to the Department using the form provided by the Department. These reports shall include descriptions of services rendered to Social Equity Applicants, status of loan repayment, the progress of the incubated Social Equity Applicant in achieving viability, and any other information requested by the Department. The Department will review the report for completeness and to verify whether the host has continued to provide the preliminarily approved services. Each satisfactory report will be deemed a verified report. If a host does not submit a report or the Department cannot verify that the preliminarily approved incubator services were provided on a consistent basis throughout the reporting period, the Department may exclude that period (or any appropriate portion of the reporting period) from consideration in determining completion of the 12-month incubator program requirement.

1. 1) Incubator programs shall submit two semiannual reports to the Department that will be due on the following dates:

   1. A) October 15, 2020; and
   2. B) April 15, 2021.

2. 2) If a Social Equity Applicant does not complete the Incubator Program, the host shall:

   1. A) find another Social Equity Applicant to incubate. If the host chooses this option, time spent incubating Social Equity Applicants shall be aggregated in order to meet the one year program requirement;
   2. B) proceed with the Cannabis Business Sponsorship Program; or
   3. C) make a contribution of the lesser of either 3% total sales during June 1, 2018 through May 31, 2019 or $100,000 to either the Cannabis Business Development Fund or to a community college for a cannabis training or education program.
3. 3) If a Social Equity Applicant ends its participation in the incubation program after 6 months but before one year, the Department may deem the program complete if the Social Equity Applicant provides the Department with information sufficient to verify that the host was willing to continue the program, that the Social Equity Applicant voluntarily ended its participation and was satisfied with the services being offered, and that the Social Equity Applicant or its principals received no consideration to terminate participation in the program;
4. 4) After the second semiannual report has been deemed verified, the Department will issue the host a final approval letter verifying completion of the minimum requirements of the Cannabis Business Incubator Program.