Illinois cannabis is some of the most expensive weed in America

If you’re facing sticker shock in Illinois, you’re not alone and your suspicions have been confirmed: Illinois ranks among the states with the most expensive retail cannabis markets in America, according to a new report from Headset.

In the first six months of 2023, total cannabis sales in Illinois exceeded $950 million. Illinois is home to the third largest cannabis market in the US, with only California and Michigan having larger markets. Illinois is the country’s sixth largest state by population, but the limited number of brands poses several challenges for the state.

The report, A Deep Dive into the Illinois Cannabis Market, aims to examine the state’s cannabis market using analytical data on thousands of products to determine how it compares to other states. Headset focused on a few key areas including revenue growth, product category popularity, pricing, market basket analysis, and demographics.

With only 118 brands in Illinois, market consolidation is severe in the state: 68% of sales come from just the top 10 brands. Illinois will soon issue 55 new retail licenses to expand access to its home market. There are currently 120 licensed retailers in the state – very few compared to other states.

Headset reports that the pre-rolls category – typically one of the fastest growing categories – is the most underrepresented category in this market, more than four percentage points below the national average. “The category represents an area of ​​opportunity in Illinois, as pre-roll sales in the state grew 5.6% last year,” reports Headset. “In Illinois, 27% of total sales come from vertically integrated products. This is the third highest value of any state currently tracked, behind only Colorado (28%) and Massachusetts (44%).

“Prices in Illinois are among the highest in the country,” reports Headset. “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, but in Illinois they generate 42.1% of total sales.”

The data was collected from real-time sales reports from participating cannabis retailers via their point-of-sale systems. However, according to the headset, there is a possibility of false positives in the event of duplicates, misclassified products, inaccurate entry of products into checkout systems or human error.

However, state leaders are taking action to address some of the issues evident in the Illinois market. For example, Illinois is the next state to allow licensed cannabis businesses to claim Section 280E tax deductions.

Illinois Gov. JB Pritzker recently signed a budget on June 7th that includes provisions for the cannabis industry, specifically the establishment of funds for cannabis companies and the ability to take tax deductions.

The fiscal year 2024 state budget bill includes the Cannabis Ordinance and Tax Act, which addresses issues that result in cannabis companies not being able to make Section 280E tax deductions.

The proposed budget also includes a provision to create the Cannabis Business Development Fund, which aims to assist cannabis business owners in Illinois. A fund would “make soft loans available to qualified social justice applicants” to fund expenses such as “establishing and…” “operating” a cannabis business (and reimburse the Department of Commerce and Economic Opportunity for the costs associated with those low-interest loans or grants).

The fund would also fund outreach efforts aimed at attracting and supporting social justice applicants and research involving “minority, women, veteran or disabled people in the cannabis industry.”