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Mid-America Blog

Cannabis in Illinois: 2020 In Review


By: Dan Tausk Principal, Mid-America Real Estate Corporation

December 15, 2020

As we approach the end of the first year of adult-use cannabis sales in Illinois, the numbers are startling. November, while flat for the first time in 2020, still topped $75M and combined with medicinal sales, surpassed $100M for the second straight month. First year combined sales may approach $1B, almost twice the initial projections for the year. If so, tax revenue for adult-use sales could surpass $150M.

I attended (virtually, of course) MJBizCon, the industry’s annual convention, now in its ninth year. Insights on the dramatic events of 2020 and their impact on the evolving cannabis industry as well as extreme optimism for legislative wins in 2021 dominated the topics.

Here are some positives and negatives from the Illinois market as we move into 2021 and hopefully, a post-pandemic “normalcy.”

Positives:

  • Sales – Started in the $30M/month range for adult sales for January, but as COVID hit and cannabis was deemed “essential,” sales grew consistently to mid-$70M in November.
  • Agility – The limited number of retail dispensaries to start the year (55) were forced to quickly adapt to COVID and did so via increased digital capacity (online ordering), pay system advancements and curbside pickup.
  • Creativity – While chasing approvals to open their critical “second sites,” many existing licenses were forced to change on the fly, re-design, and recalibrate strategy. Most succeeded, and we also saw the opening of “flagships” from Cresco, Grassroots/Greenhouse and others, both urban and suburban.
  • Adoption – Many local municipalities, given the opportunity to see the uneventful yet bountiful sales in 2020, are now slowly opting in for future dispensary expansion. This includes alderman in Chicago who may have taken a “wait and see” approach in 2019. This will be critical as the next round of 75 licenses is released.

Negatives:

  • Supply Chain – Shortages in Illinois were prevalent the entire year as existing growers pushed expansion only of existing facilities. Illinois pricing remained almost twice that of neighboring Michigan.
  • Business Disruption – Disruption during Chicago’s unrest happened twice and forced shutdowns for lengthy periods of time. Several dispensaries were looted.
  • License Delays – Delays for the “next 75” occurred, and subsequent lawsuits ensued from the anticipated May 1st lottery. This has yet to be resolved, and the awarding of these primarily Social Equity-backed licenses could push into early 2021.
  • Relocations – No relocations were allowed for the “initial 55” medical sites, forcing most to adapt-in-place to increased demand, long lines and lack of space and parking. A recent study indicated Illinois may have left $100M in tax revenue on the table by delaying this process of relocations, right-sizing.
  • Stalled S.A.F.E. Banking – Same for M.O.R.E. Act? While both impactful bills have now passed the U.S. House, they are expected to stall in the Senate into 2021, forcing more Illinois existing and new operations to rely on cash-heavy operators and a lack of access to capital.

2021 will again push the cannabis market to new heights. State level expansion will continue, and the business model of retail dispensaries will evolve. Illinois’s first year has proven to be much like the national market – great success stories, lots of tax revenue and little crime or nuisance. However, legislative delays, struggles with Social Equity and supply chain challenges remain high.

For the real estate markets in 2021, 75 newly licensed dispensaries and 40 craft growers may represent over 700,000 SF of new demand for space in Illinois alone. No other retail category will be more active.

2020graph2_600px

Q1 2020

2.3M products sold |
$109M in sales
$27.25M
in tax revenue

Q2 2020

2.95M products sold |
$128M in sales
$32M
in tax revenue 

Q3 2020

3.93M products sold |
$192M in sales
$48M
in tax revenue

Q4 2020

4.85M products sold |
$230M in sales
$57.5M
in tax revenue

2020 TOTAL

14.03M products sold
$659M in sales
$164.75M
in tax revenue
         
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