If you’re facing sticker shock in Illinois, you’re not alone and your suspicions have been confirmed: Illinois ranked among the states with the most expensive retail cannabis markets in America, according to a new report by Headset.
During the first six months of 2023, Illinois sold over $950 million in total cannabis sales, making Illinois home to the third largest cannabis market in the U.S., with only California and Michigan with larger markets. Population-wise, Illinois is the sixth largest state in the country, however a limited number of brands pose several challenges to the state.
The report, “A Deep Dive into the Illinois Cannabis Market,” is designed to examine the state’s cannabis market with analytical data on thousands of products to determine how it compares to other states. Headset focused on a few key areas, including sales growth, product category popularity, pricing, basket analysis, and demographics.
Since Illinois is home to only 118 brands, the state is home to high market consolidation with 68% of sales coming from only 10 top brands. Illinois will soon be issuing 55 new retailer licenses to expand access to its domestic market. Currently, the state is home to 120 licensed retailers—very low compared to other states.
Headset reports that the category of pre-rolls—typically one of the fastest-growing categories—is the most underrepresented category in this market, clocking in at over four percentage points lower than the national average. “The category represents an area of opportunity in Illinois as Pre-Rolls in the state have seen sales increase 5.6% in the last year,” Headset reports. “In Illinois, 27% of total sales come from vertically integrated products. This is the third highest of any currently tracked state behind only Colorado (28%) and Massachusetts (44%).
“Prices in Illinois are among the highest in the country,” Headset reports. “The average item price in Illinois is currently 89% higher than the rest of the US market. Consumers over the age of 41 typically account for 36.4% of sales, however, in Illinois they capture 42.1% of total sales.”
The data was collected from real-time sales reporting by participating cannabis retailers via their point-of-sale systems. Headset stipulates, however, the potential does exist for misreporting in the instance of duplicates, incorrectly classified products, inaccurate entry of products into point-of-sale systems, or human error.
State leaders, however, are taking action to fix some of the problems that are evident in the Illinois market. For example, Illinois is the next state to allow licensed cannabis businesses to take tax deductions under Section 280E.
Illinois Gov. J.B. Pritzker recently signed a budget bill on June 7 that includes provisions for the cannabis industry, specifically regarding establishing funds dedicated for cannabis businesses and allowing them to take tax deductions.
The Fiscal Year 2024 State Budget bill includes the Cannabis Regulation and Tax Act which addresses issues with cannabis businesses not being allowed to make tax deductions under Section 280E.
The budget bill also includes a provision that creates the Cannabis Business Development Fund that is aimed at helping cannabis business owners in Illinois, a fund would “provide low-interest rate loans to Qualified Social Equity Applicants” to pay for expenses such as “starting and operating” a cannabis business (and compensate the Department of Commerce and Economic Opportunity for costs related to those low-interest loans or grants).
The fund would also pay for outreach “targeted to attract and support” social equity applicants, as well as research involving “minorities, women, veterans, or people with disabilities in the cannabis industry.”
The post Illinois Cannabis Among Most Expensive Weed in America appeared first on High Times.
