Illinois has emerged as one of the states with the highest retail cannabis prices in the country, according to a recent report released by Headset. The report, titled “A Deep Dive into the Illinois Cannabis Market,” delved into various factors that contribute to the high cost of cannabis in the state.
In the first half of 2023 alone, Illinois recorded a staggering $950 million in total cannabis sales, cementing its position as the third-largest cannabis market in the United States. Only California and Michigan surpassed the state in terms of cannabis sales. Given its status as the sixth most populous state in the nation, the limited number of cannabis brands operating within Illinois has posed significant challenges for consumers.
One of the primary factors behind the expensive cannabis prices is the lack of brand diversity in the market. With only 118 brands in operation, Illinois has experienced high market consolidation, with 68% of sales coming from just 10 top brands. However, there is hope on the horizon, as the state is set to issue 55 new retailer licenses to expand access to its domestic market. Currently, Illinois only has 120 licensed retailers, which pales in comparison to other states.
Headset’s analysis also revealed disparities in product categories. Pre-rolls, usually one of the fastest-growing categories, are surprisingly underrepresented in the Illinois market, lagging over four percentage points behind the national average. Nevertheless, there is a silver lining, as pre-roll sales in the state have recently witnessed a 5.6% increase.
Prices are another major contributor to the high cost of cannabis in Illinois. The average item price in the state is a staggering 89% higher than the rest of the US market. This steep pricing has made cannabis less accessible to consumers, with the report indicating that consumers over the age of 41 account for 42.1% of total sales in Illinois, surpassing the national average of 36.4%.
To address some of these challenges, state leaders are taking action. Governor J.B. Pritzker signed a budget bill on June 7 that includes provisions specifically aimed at bolstering the cannabis industry. One significant step is the allowance of licensed cannabis businesses to take tax deductions under Section 280E, a change that is expected to benefit the industry and potentially alleviate pricing pressures.
Additionally, the budget bill creates the Cannabis Business Development Fund, designed to support cannabis business owners in Illinois. The fund will provide low-interest rate loans to Qualified Social Equity Applicants, helping them cover startup and operational expenses while also promoting diversity and inclusion within the cannabis industry.
As Illinois moves forward with efforts to increase market competition and support cannabis entrepreneurs, it is hoped that the high prices currently experienced by consumers will be addressed, making cannabis more affordable and accessible to all residents.
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