Illinois cannabis companies can now call on approved industrial hemp farmers to help meet growing demand.

Zoom. Toilet paper. Canned goods. Cannabis. 

Each one has proven to be an essential staple as we all settle into physical distancing restrictions. The State of Illinois has acknowledged our new essentials by allowing dispensaries to remain open while also allowing cultivators to use industrial hemp as an ingredient in THC-infused products. 

The March 23 policy of the Illinois Department of Agriculture’s Bureau of Medicinal Plants and approved by Governor J.B. Pritzker, allows inventory-strapped cultivators to purchase industrial hemp from approved farmers to be used “as an ingredient in cannabis-infused products”. 

Farmers all over the state who are currently carrying an excess of the non-intoxicating part of the plant now have a market in the form of cultivators, who in most cases also process and retail cannabis. Those vertically-integrated cannabis companies now have more space and ingredients to meet the surging demand for anything with THC. The new policy is scheduled to last through October.  

“This policy will offer a new market to the hemp growers in Illinois, while at the same time freeing up grow space for THC specific plants in the cultivation centers,” said Jeff Cox, Bureau Chief for Medicinal Plants at Illinois Department of Agriculture. “Additionally, the hemp processors gain a market to sell extracted hemp oil. We believe this will be a win-win-win for all stakeholders.”

From illicit to essential in a matter of months 

Across the country, multiple states where medical cannabis is legal are giving dispensaries the same “essential business” status as grocery stores and pharmacies. New York Governor Andrew Cuomo, who also has a bit on his plate, still hopes to legislate legal recreational use this year. 

Dispensaries in Illinois and across the country are reporting consumer demandcomparable to the opening weeks of legal status, as well as April 20th, the 420 holiday for cannabis enthusiasts. 

Serving this demand, however, is challenged by the finite number of people allowed in stores due to social distancing restrictions, as well as by employees who for a variety of reasons are no longer showing up for work. 

Up until March, any workers whose job involves touching the plant were required to wear a state-issued badge. However, COVID-overwhelmed state agencies have put a hold on issuing new badges. So, in response, the state is easing requirements to allow for digital and printed certification. Cannabis companies are also lobbying for employees in their other departments to be allowed to temporarily fill in to meet demand. 

Consumers still want flower 

Despite potential health risks for those who smoke or vape anything during the time of CoronaVirus, flower is and will likely remain in demand for the foreseeable future. 

Since adult-use consumption became legal in January, most of the flower in Illinois was reserved for users with a medical card. Cultivators are expected to have more flower available beginning mid-year to accommodate everyone. 

Until there is “an equilibrium” in place that balances supply and demand, don’t expect an immediate migration of flower enthusiasts to edibles, elixirs and other lung-friendlier form factors.

“We will follow the market and let demand for products and consumer choice drive us,” said one industry observer. 

Capital remains hard to come by

Despite a significant increase in the stock prices over the last week for Illinois’ two publicly traded cannabis companies – Green Thumb Industries and Cresco Labs – equity capital for industry businesses is scarce in the current economic climate.  

“Capital is both defensive and opportunistic,” said David Friedman of Panther Capital, which has investments in multiple cannabis companies. “We are trying to figure out what companies to backstop and what companies we let fail.”

Vertically-integrated plant-touching companies will continue to sell off property and assets to cannabis-focused Real Estate Investment Trusts, including Chicago-based NewLake Capital, in order to maintain operations and meet increased demand. Last month, NewLake entered into a $3.4 million purchase-leaseback agreement with Chicago-based PharmaCann. In January, Cresco Labs signed a $10.5 million purchase-leaseback agreement with New York-based Innovative Industrial Properties. Industry executives and investors queried by Grown In anticipate more of these type of transactions in the near-term. 

Companies in the software, manufacturing and professional services sectors that were created to sell things to licensed cannabis companies have their own set of issues. While they have the ability to raise or borrow money from more sources, their primary customers don’t have as much money to spend on them. 

 What’s an investor to do? 

“Opportunistic capital is a double-edged sword,” said Friedman. “From chaos comes opportunity. But profiting off of the desperation is predatory, so ethical issues are swirling around the capital markets and nobody wants to step out and lead that line of opportunity.” 


Brad Spirrison is a journalist, serial entrepreneur and media ecologist. He lives in Chicago with his son. Interests include music, meditation and Miles Davis.