In the months leading up to coronavirus, Illinois-based cannabis companies navigated through supply chain disruptions, product sales restrictions and nose-dive valuations. Yet consumers couldn’t get enough of what they were selling.
“Everyone is losing money,” explains Kris Inton, an equity analyst who covers the cannabis sector for Chicago-based Morningstar. “The question is who survives long enough to be part of that market as it continues to grow tremendously.”
Green Thumb Industries (GTI), based in Chicago, is among the few publicly traded companies with enough cash on hand to ride things out for a while. This, says Inton, is the result of a more “deliberate” expansion strategy where the company purchased product wholesale rather than entering a “competitive” cultivation market where costs run high.
As of March 19th, all of GTIs 41 nationwide locations (including seven in Illinois) remain open. While many independent dispensaries are limiting sales to medical consumers exclusively, GTI along with Cresco Labs’ Sunnyside dispensaries and other vertically-integrated multi-state operators are continuing to serve adult-use consumers at some capacity.
“Many of our customers and patients rely on us for life-changing medicine and their daily well-being,” said Linda Marsicano, GTI’s VP of corporate communications. “So we are doing everything possible to serve them while implementing safety precautions and following CDC guidelines and state regulations.”
Chicago-based PharmaCann, which operates in seven states and has four dispensaries in Illinois, continues to build out cultivation facilities (including one in downstate Dwight) that once complete will bring more robust inventory to local retailers. In the meantime, says the company’s director of regulatory and public affairs, Jeremy Unruh, PharmaCann is doing what it can to share precious flower inventory in local retailers in need.
“We are taking steps to carve out significant amounts of inventory that is being used by independent stores,” he said.
Not enough badged budtenders
Fewer dispensary employees are choosing to show up for work right now. Staffing was already an issue earlier in the year, when adult-use sales first became available. Back then there were not enough state certified and badged employees to handle the increased demand.
“We are hopeful that states will move faster on new employee approvals,” said Mark de Souza, CEO of Revolution Global.
Illinois typically requires a biometric fingerprint in order to obtain a badge to work in many cannabis-related jobs that touch or are near the plant. Sources indicate that the state is loosening restrictions to allow individuals who have not obtained a formal badge – but have completed all certification requirements – to show up for work with a print out or digital record of completion.
Curbside sales a work in progress
Industry owners and executives are generally applauding efforts by the state of Illinois to reduce road blocks to a heavily regulated – but steadily normalizing – industry.
Case in point, this week the Illinois Department of Financial and Professional Regulation made it possible for medical patients to pick up online orders via curbside delivery. While this helps stores maintain social distancing directives, employee shortage and implementation challenges are slowing down the sales process. Many dispensaries are not yet serving customers via curbside.
Applications for craft grow, infusion and transport licenses extended – recreational expansion on pause
The second phase of adult-use commercial cannabis licenses in Illinois was pushed back two weeks to March 30. These coveted and competitively obtained assets, which on average are estimated to be worth close to $2 million in intrinsic value by industry practitioners, include 40 licenses to craft grow, 40 licenses to infuse and an unlimited number of licenses to transport cannabis in Illinois.
Meanwhile, cannabis companies with recreational licenses looking to cut through municipal zoning issues to open up shop in Chicago is on hold. These processes typically require community meetings, which won’t resume for the foreseeable future.
Whenever we hit the flip side of all this, Naperville will probably be open for recreational business as voters decided on 3/17 in a non-binding referendum that the pros outweigh the cons. The mayor’s onboard as well, and expect other municipalities still on the fence to officially follow-suit, perhaps via community Zoom calls.