An industry analysis claims that legal cannabis in Illinois is among the most costly in the US. Illinois set records for recreational marijuana sales last year, demonstrating that consumers have not been discouraged by the state’s high cost. The state is among the most highest in the nation. Following two years of strong sales growth following Illinois’s legalization, the market currently seems to have plateaued, rising at a rate of little over 2%, as opposed to roughly 13% last year and more than 100% in 2021.
In 2023, cannabis sales brought in more than $1.6 million in revenue, a 15% increase over the prior year. Of that, the state brought in over $400 million in tax revenue. As a result, cannabis sold in Illinois is the most costly in the Midwest and almost the most expensive in the US. Compared to Michigan’s about 800 and Washington State’s over 1,000 separate brands, Illinois has a relatively small number of 118.
The average price of an ounce of marijuana in Illinois is $256. The “Headset Report” found that Illinois has the third-largest retail cannabis market in the country, trailing just California and Michigan. Both states are on track to sell nearly $1 billion more weed than Illinois despite having about 2.5 million fewer residents. It’s also common in Illinois for retailers to sell house brand products, which when coupled with the small selection of brands, likely contributes to the high prices, according to Headset.
Marijuana Prices
Illinois Department of Revenue compare the monthly average price per gram of cannabis flower in Illinois to prices in Michigan, a neighboring state with a comparable length of pricing history, in order to put Illinois cannabis prices into perspective. The most common way to consume cannabis is through flower, which accounts for 42% of the Illinois market and represents the highest portion of overall sales compared to extracts, infusions, and other products. Using information from the Michigan Cannabis Regulatory Agency, we compare the cannabis industry in Michigan.
Less than a year before Illinois, on Dec. 6, 2018, Michigan legalized cannabis for recreational use. Since January 2020, retail cannabis costs have decreased in both Illinois and Michigan, with a greater decrease in pricing in Michigan. Bureau of Economic Analysis, 2023 declares that both supply and demand factors may be relevant, but we suggest that demand — the willingness to pay for cannabis — is similar in each state.
Implications
There is a significant association between changes in the capacity of legal production and price of marijuana, even if it is challenging to pinpoint the exact amount that Illinois’s high cannabis prices are caused by production limitations. Prices in Michigan have decreased more than those in Illinois throughout time as the state’s production capacity has increased. Illinois had a sizable licensed production capacity when it first legalized cannabis for recreational use, but it has subsequently let very few new players into the market.
Improved supply and demand data are required in order to fully comprehend the evolving recreational cannabis markets at the state level. Without better production and usage data, it is difficult to forecast future changes in the Illinois cannabis industry. Accurate and timely supply and demand information is essential for agricultural markets to function well (Janzen, 2022). Farmdoc Daily noted that Michigan discloses significantly more comprehensive production statistics than Illinois. When it comes to providing information on the cannabis section, Illinois ought to think about modeling itself after its neighbor.
Cannabis Manufacturing Permits
Licenses for the cultivation of marijuana are one measure that is similar amongst states. The growing of marijuana is governed by the Illinois Department of Agriculture. Growing cannabis is subject to stringent licensing procedures, just like in all jurisdictions where it is legal to manufacture cannabis.
This may limit the capacity of producers in high-priced states to respond to high costs by increasing supply. Illinois issues two types of licenses for cannabis producers: craft grower and cultivation center. The craft grower license allows growing and packaging of widespread cannabis products.
Written By Dijana Reedfields.
Sources:
Axios Chicago – Illinois’ recreational weed market is most expensive in the Midwest
My Stateline.com – Legal marijuana in Illinois is the most expensive in the Midwest: report
farmdoc DAILY –The Emerging Cannabis Market in Illinois: Prices, Taxes, and Supply Constraints
Patch – Illinois Has Most Expensive Legal Marijuana In U.S., Report Finds
Chicago Sun Times – Pot prices in Illinois are some of the highest in the nation, new study finds
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Inset Image Courtesy Of Clare Black‘s Flickr Page – Creative Commons License
