Exclusive: State data shows 77% of Illinois’ cultivation market controlled by six companies

Six companies controlled over three-quarters of the Illinois cannabis cultivation market as of March, according to BioTrack data obtained by Grown In. 

While the state has awarded 21 cannabis cultivator licenses, just 10 of those licenses owned by six vertically-integrated operators accounted for 76.8 percent of the marijuana shipped from Illinois fields and facilities, the data showed.

Dominating the market were these vertically-integrated companies: Verano Holdings, owner of Ataraxia, a cultivator in Albion; Cresco Labs, with cultivators in Joliet, Kankakee and Lincoln; Green Thumb Industries, which owns cultivators in Ogelsby and Rock Island; Ascend Holdings, which owns a cultivator in Barry; PharmaCann, which owns cultivators in Hillcrest and Dwight; and Revolution Global, which owns a cultivator in Delevan.

In March 2020, Verano’s Ataraxia had 33.9% of market share; Cresco Labs had 15.8%; Green Thumb Industries, 12.3%; Ascend, 5.6%; PharmaCann, 4.3%; and Revolution had 5.0%.

Emerging from the data is a picture of a nascent but fast-growing industry in which a handful of players have found runaway success in Illinois. 

“Larger companies in multiple states have more capital. So, their ability to respond quickly is greater,” said Pamela Althoff, executive director of the Cannabis Business Association of Illinois.

Peter Contos of Cannabis Equity Illinois Coalition said the data underscores how difficult it will be to diversify the industry. 

“It’s something I have to question — how does this happen? Why are there so few companies that have so much control?,’’ said Contos’ whose organization represents South and West Side Chicago residents and non-profit organizations advocating for equity in the industry.

“Was this what they had envisioned when (legislators) passed the equity-centered legislation?’’ Contos said.

Required by every state with a legalized cannabis market, these tracking systems record each stage of cannabis production and sale through the supply chain. Illinois law requires that  participants along the cannabis supply chain enter data at every step, from the time a seedling is planted to when a gummy is sold at a store. The data allows state regulators to ensure cannabis security and monitor the health of the cannabis market in their state.

Grown In analyzed transportation manifest reports for each Illinois cultivation facility between March 2019 and March 2020, detailing how much product each cultivation facility shipped to other cultivators, testing labs or dispensaries. Each unit shipped is labeled by product type and classified as either medical or adult-use cannabis. The reports obtained by Grown In, covering every cultivator in Illinois are provided routinely to state regulators and typically not made available to the public.

State Rep. Kelly Cassidy (D-14), the lead sponsor of legislation that legalized recreational cannabis, said she has been shown similar BioTrack reports by the Illinois Department of Agriculture or Illinois Department of Financial and Professional Regulation, but does not have the capacity to produce them. 

“We’ve been working to obtain more transparency, but this sort of information has never been publically available,’’ Cassidy said.

Unit sales by all cultivators increased over 300% from March 2019 to March 2020, Grown In’s analysis showed. Verano Holdings’ Ataraxia led the pack in growth, shipping six times more product in March 2020 than it did a year before.

A California cannabis veteran said the Illinois market concentration among just five companies was unusual.

“What’s interesting here is you have Verano already showing signs of breaking out’,’ said Jon Paul, former chief financial officer for Plus Products, a publicly traded cannabis gummy producer. “That’s more dramatic than what I saw in California, with edibles. That’s a very substantial jump in a short period of time.”

Althoff, of the Cannabis Business Association of Illinois, said vast differences in production for cultivators resulted from some businesses being unprepared for expansion when legalization of recreational cannabis in January led to a surge in sales.The BioTrack data shows that as of March 2020 most cultivators were producing less than 5% of market share. Among the multi-state operators, Justice Grown in Edgewood and 4Front’s Illinois Grown in Elk Grove Village were among the smallest, producing 0.2% and 1.2% respectively, of Illinois’ cultivation market. The BioTrack data shows that Columbia Care’s Curative Health in Aurora had produced very little product, since it only received permission to begin operations in late 2019, after a court battle over whether or not the license was properly awarded.

Independent dispensaries – those not owned by vertically integrated or multi-state operators – produced only 11.8% of unit sales in March 2020, according to the BioTrack data.

“Some of the industry were more agile in being able to apply for their recreational growth licenses and were in the preparatory stages of expansion than others. At this juncture, every license holder is expanding,” says Althoff. “Some took longer than others to obtain that recreational license.”

While most cannabis locations were operating as medical cannabis producers last summer, the first recreational licenses were not assigned until August 2019, less than two months after Gov. J.B. Prizker signed the recreational legalization bill in June.