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The Business of Marijuana in Illinois

Sales are as high as the consumer, but a deeper look sees market inefficiencies.


A quick glance at Illinois marijuana sales in the first year of legalization shows eye popping numbers. Cannabis sales in Illinois exceeded $1,000,000,000, much higher than any other state’s first twelve months of legalization. But as Andrew Long of Marijuana Business Daily points out that’s in the bottom half of sales per capita, adjusted for inflation. As a central hub for midwestern marijuana, how can that be? The answer, of course, is complicated and due to a variety of factors.


PRICE


The price of marijuana in Illinois is astronomical. Part of this is due to taxes. Illinois is among the highest in the nation when it comes to cannabis sales/excise tax and the higher the THC content, the higher the taxes. Flower, the traditionally most common way to consume cannabis, is typically sold in eighths, which is 3.5 grams, an eighth of a 28 gram ounce. Most flower runs around $65/eighth, pre-tax. Add taxes and the out the door price is $80+ for about 3-5 joints. In comparison to other markets nationwide these prices are very high. The same can be said of the less-traditional products. Concentrated vape cartridges, the trendy and discreet way to get high, come mostly-standard in half gram quantities. Because of the concentration, these cartridges are always above the threshold for higher taxes, meaning you’re spending well over $80 out the door for a cartridge that often times feels under-filled. The same can be said of edibles; they’re higher priced and higher taxed than other cannabis markets nationwide. The absurd pricing has led to a still robust black market. Savvy consumers have options, if not legal ones.


SPARSITY

If you live in the northeast part of the state, choices aren’t a problem, even if prices are collusion-esquely high. Chicago and the surrounding market boasts dozens of dispensaries and the most connected of consumers will use apps like WeedMaps and r/ILTrees as sources to share deals, sales, and tips. But if you live in any western part of the state, you’re going to invest a not-inconsequential amount of time to purchase your pot legally.

REGULATION


It will come as no shock to anyone who has followed Illinois politics, but claims of corruption exist in regards to who becomes licensed and who doesn’t. The Illinois legalization rollout was always supposed to benefit corporations. While lawmakers claimed the strict licensing limits evened the playing field for smaller and disenfranchised growers and set in place a foundation that levels supply with demand, all it really did was give large corporations a six-month head start. Even as recently as September, claims of corruption are common. Principled and educated consumers struggle with the moral and market consequences of supporting these corporations.


FUTURE OUTLOOK

The future of marijuana in Illinois is brighter than its past but there are many, many hurdles to overcome. In the face of tax revenue, local objections are beginning to falter. Small municipalities like Loves Park, noticeable if nothing else for the payday loan and slot machine buildings on nearly every corner, banned the sale of recreational cannabis at a secretive and rushed December 2019 meeting. After recognizing the immense amount of lost revenue, local lawmakers are set to embrace recreational sale. But until these stories become commonplace, legal marijuana in Illinois will continue to be a test of affluence.


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