If you’re just catching up to Illinois’ cannabis industry, you should know: Illinois does not behave like any other recreational-legal state. Here’s fourteen things to know so you better understand why.
1. Sales are up, but not nearly up as much as Michigan.
Illinois’s cannabis industry is growing at a rapid clip, June sales were up to $79 million, up 20% over May – but it consistently lags behind Michigan, which sold $90 million in June, despite the fact that it launched recreational sales only a month before Illinois, and has three million fewer people.
2. There are about 60 dispensaries in Illinois right now – new ones are opening every week.
That may seem like a big number, until you realize Michigan has 264 medical provisioning centers (what Michigan calls medical cannabis retail locations) and Massachusetts has 221 retailers. Illinois Cannabis Czar Toi Hutchinson said in Junethat she has a study that shows Illinois can support 500 dispensaries.
3. Current dispensary owners are slow to open new locations, because there’s a supply shortage, especially for recreational cannabis.
Illinois’ 55 medical cannabis dispensary licensees, holdovers from before recreational was legalized, are each allowed to sell recreational at their current locations and to add a second location to sell just recreational. But so far only about half a dozen recreational-only locations have been opened. Dispensary owners tell Grown In that it’s because they just can’t get enough guaranteed recreational supply to warrant the cost of siting and building out a new store.
4. Not every dispensary operates the same.
The best dispensary sells 23 times more than the worst, and 8.5 times more than the average, according to state data Grown In acquired. We also verified from the data that not every dispensary is doing the same. The best performing dispensary sold over 139,000 units in March 2020, while the worst performing sold about 5,600 units. (The data Grown In obtained only tracked units, not dollar amounts.) The average dispensary sold about 16,000 units. Exactly why some dispensaries are runaway successes is not clear, but it does not seem that having a dispensary license is the same as a license to print money.
5. Dispensary licenses are sharply limited by state regulators.
Even if Illinois’ current license holders opened up all of their second locations tomorrow, there would only be 110 dispensaries. When the next set of licenses are approved, there could be a maximum of 185. And that’s the most state has publicly discussed allowing – until December 2021, when the 2019 state law calls approving more 110 dispensaries and possibly craft grow locations. But put it in perspective, Michigan has 264 dispensaries today, and Massachusetts has 221 – right now.
6. We think the next set of 75 dispensary licenses will be issued in early September.
Illinois regulators have been cagey on when the next set of licenses will come out. Toi Hutchinson said in a Cook County public hearing in June that early September is the time to watch. But there have been no official notices released or specific dates set.
7. We also think 40 craft grow licenses will be issued in late August, or early September.
We heard from craft grow license applicants that they started receiving deficiency notices in the mail last week. Applicants have 10 days from the postmark to respond to notices, and we still hear this week that notices are still arriving. It seems that if applications are wrapped by early August, selection could go through by mid-August. Or maybe there’s more selection work to do? The state has not announced how many craft grow applicants there are and it has not released any information about the selection process other than the point scoring system it is using.
8. It’s hard to know when infuser or transport licenses will be issued – probably early September.
Cannabis Czar Hutchinson has repeatedly said that the social equity component of license selection for dispensaries and craft grow licenses is her – and Gov. J.B. Pritzker’s – top priority. While there seems to be less public and political interest in infuser and transport licenses, they also seem to be much less competitive. Therefore, our educated guess is that the state will roll them out either at the same time as dispensary licenses, or just after.
9. Illinois only has 21 cultivation licenses, but three quarters of production comes from 10 of them – so craft growers might significantly alter the market.
State data Grown In acquired showed that as recently as March, 10 of the 21 cultivation licenses were producing 77% of the cannabis sold. Other dispensaries may have ramped up since then, but either way, Illinois cultivators are producing much less than many anticipated. Craft growers, which will take 9-to-12 months before they have any product available to sell, are where the state is focusing on the grow side. We will all have to wait a while before we know how they impacted the market.
10. There’s no word when Illinois might add more cultivation licenses.
It’s not in the state laws or regulations. So once craft grow licenses are awarded, that might be it for a while.
11. Social equity is the key to everything.
The upcoming dispensary, transport, infuser, and craft grow licenses are awarded through a points system. Because the social equity component has so much weight, you probably can’t win a license without a social equity plan. The Pritzker Administration has said social equity awards are a top priority. But if the coming dispensary and craft grow licenses aren’t awarded to a significant number of social equity applicants, you can be sure Pritzker won’t have many Latino or Black political friends. Black and brown political leaders in Illinois have also made it clear that cannabis social equity is a top priority. So the heat is on.
12. State regulators have limited staff and leadership.
Because Cannabis Czar Toi Hutchinson is a senior advisor based in the Governor’s office, not an agency head, she has no direct-line authority. Since Jeff Cox left, the Department of Agriculture doesn’t have a cannabis division leader, and the responsibilities for cannabis are spread over four Illinois agencies. The June 2019 recreational legalization law created a cannabis boss position, but Hutchinson can’t take that position because state law restricts former state legislators from taking positions they voted to create. So, it remains empty 13 months after it was created.
13. There’s likely to be a big cannabis law change in the Fall legislative session.
An earlier set of changes got shot down in May, so expect major regulation changes. Among possible changes: Regulator authority to direct cultivator supply to specific dispensaries, cannabis worker badging requirement changes, and the ability for dispensaries to relocate.
14. Just because there’s a few market leaders now, doesn’t mean they will be later.
Companies like MedMen and Acreage are undergoing big cash crunches, and potential state regulation changes could favor different players later. The new licensees will bring in a new influx of cash, while existing players may come under increased state regulatory scrutiny. Craft growers will bring in new supply, existing owners may learn better ways to execute. Everything could change in the next year.
Note: This article originally cited “processor” licenses. The correct license in Illinois are for “infusers”. The article has been corrected.