Earlier this month, Grown In reported a series of findings from a set of reports from Illinois’ seed-to-sale tracking system, BioTrack. The data is voluminous, and reveals a host of findings, many of which are interesting, but not quite big enough to warrant an article of their own. So, here is a grab bag of additional analysis about Illinois’ cannabis dispensaries we’ve found from the data.
- Downstate and suburban dispensaries are selling much more than dispensaries in Chicago
Of the 55 legal cannabis dispensaries in Illinois, 19 are in suburban Cook County and collar counties, 24 are downstate, and 12 are in the city. Early on, the casual observer’s expectation was that dispensaries in Chicago would sell much more than anywhere else. Turns out, that’s just not true.
- Suburban dispensaries, on average, are selling more than anyone
On average, suburban stores are selling much more than city or downstate dispensaries. Some of that number is skewed by two suburban dispensaries: EarthMed in Addison and Green Thumb Industries’ Rise dispensary in Mundelein, which together sold 33% of all suburban cannabis sales in March 2020.
Of all the dispensaries in Illinois, EarthMed and Rise-Mundelein are the two biggest breakout performers, selling on average 6.7 and 8.5 times more than the average Illinois dispensary.
- There’s a big range of performance for dispensaries
While Rise-Mundelein and EarthMed are the two big breakout performers, among the state’s 55, there are many other dispensaries doing very well. But then there are many doing not as well. Without revealing too much granular data, it’s hard to pin down trends as to why. Some poor performers are independently owned, some are part of Multi-State Operator companies.
- Twice as much smokable cannabis is produced as edibles, but production of smokable cannabis isn’t increasing as fast as edibles
Cultivators are quickly delivering more smokable cannabis to dispensaries, in the form of both flower and extract. But they are also ramping up edible production. While anecdotes about lack of flower can be heard just about everywhere, clearly cultivators are trying to increase their smokable product deliveries. But! Edibles are a higher value-add product, which means cultivators make more money from them than smokable products. The data here does suggest that cultivators are ramping up production of edibles at a slightly faster rate than smokable products.
- Lack of competition for cultivators is skewing the market – maybe?
Over twelve interviews conducted over the last four weeks with dispensary operators, cultivators, license applicants, and analysts, everyone agreed that as Illinois’ cannabis market stands today, the market is skewed due to the limited number of cultivators producing product. While there are 21 licenses, as of today, there are effectively only eighteen operators, because Green Thumb Industries owns two cultivator licenses and Cresco Labs owns three. PharmaCann used to own two, but sold its Hillcrest license to a group led by NuMed in May. Of those eighteen, 77% of cannabis product is produced by six companies, as we reported earlier.
The result is that in our conversations with dispensary owners, many feel squeezed by vertically-integrated cultivators, and are unwilling to talk about their circumstances on the record for fear of getting cut off by vengeful cultivators.
Yet, cultivators have not really expressed market muscle. Our analysis of Illinois’ BioTrack data shows that vertically-integrated companies are not openly cutting off supply to independent dispensaries. Also, some independent dispensaries are doing very well compared to vertically-integrated companies.
- There are no clear, runaway winners in Illinois – yet
Illinois’ legal cannabis market has attracted numerous big players: Green Thumb International, Revolution Group, Acreage Holdings, Cresco Labs, Verano Holdings, Columbia Care, Ascend Holdings, Merimed, and PharmaCann all have interests in Illinois, with Curaleaf preparing to buy in as well. But as much investment as they’ve made in Illinois, not all of them are doing well. Some have anemic production at their cultivation sites, some have dispensaries that for some reason have just not taken off. Locally-owned companies have risen too, like NuMed, which recently purchased a cultivator license from PharmaCann, Bedford Grow, which owns a cultivator and two dispensaries, and Greenhouse Group, which owns four dispensaries, a cultivation license and is in negotiation for sale to Curaleaf.
Amidst all that activity, the 75 new dispensary licenses and the 40 new craft grow licenses expected to be issued this summer could radically alter the market if the owners are well capitalized and are able to execute on their plans. Independent dispensary owners tell Grown In they are counting on the new craft growers to lower prices and help meet pent up demand.
On top of that, Illinois’ Cannabis Czar Toi Hutchinson made clear in public statements earlier this month that she plans to be an active regulator by policing predatory pricing by existing players and aggressively fighting lawsuits against the state. Exactly what lawsuits she is expecting, she didn’t say, but cannabis attorneys we’ve spoken to are anticipating suits against the state charging the state issued the 75 new dispensary licenses in an unfair way.
Hutchinson has repeatedly said that social equity is the most important element of the cannabis business in her and Gov. J.B. Prizker’s eyes. It will be interesting to see how much the state puts its regulatory thumb on the scale on behalf of that goal.