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Mid-America Blog

Cannabis in Illinois: July Update


Sales keep rising month-to-month as supply shortages reach critical levels

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

July 20, 2020

Illinois finished June, or the first half of the first year of adult-use market open, with more records set – according to the IDFPR:

  • Nearly one million items sold ($995K)
  • $47.6M ($35.2M in-state) adult sales only
  • Almost $77M total sales (including +/-$30M in medical sales)
  • Three more adult-use dispensary licenses issued (total now 57) including city’s second new opening

When local or national industry analysts look at Illinois, they are consistent regarding our state’s “good and bad”.

The Good

  • “Flip the Switch” adult-use licensing in late January 2019/early 2020 helped launch the strong early numbers
  • Aggressive expansion of allowable medical conditions improved patient sign-ups dramatically in late 2019/early 2020
  • Split votes for “opt-in/opt-out” around Illinois and the city’s “lottery” provided for strong expansion markets
  • Illinois new legislation considered strongest model for Social Equity licensing in the U.S. and will come on the heels of “second site” adult-use rights for existing compliant medical operators

The Bad

  • Lack of license expansion for cultivation/processing in 2018 now causing extreme, yet predictable, supply shortages across the state
  • Supply shortages, with no immediate solution in sight have Illinois wholesale pricing among highest in the U.S. and nearly three times mature markets (CA, WA, CO)Governor’s delays on issuance of next 40 craft grow licenses and 75 dispensary licenses in Illinois causing further clog in supply/demand chain with specific negative impact on new Social Equity applicants
  • No existing delivery or drive-thru sites among Illinois operators have forced operational challenges, impacting sales

So, at the midpoint of year one, what can we expect in the months to come and into 2021:

  • Continuance of one-by-one licenses will get issued and dispensaries opened, pushing retail outlets to 100 total by year end?
  • The release of the Craft Grow license winners (40) and Dispensary winners (75) forcing a feeding frenzy for allowable sites in opt-in areas
  • Continued supply shortages with stagnant price depreciation into 2021, failing to capitalize on neighboring states lag as Craft Growers only build out sites
  • Some major multi-state operators will put “caps” on Illinois licenses, creating opportunity for out-of-state and new Illinois Social Equity licenses
  • S.A.F.E. banking?? “Baked” into next COVID-19 relief package
  • Push for delivery services/add-on legislation in cannabis bill
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