Illinois infuser license holders got a big shot in the arm this week as state regulators announced a revised guidance Tuesday that now allows infusers to produce vape cartridges. For some infusers – all of which are still setting up operations – the change could result in a third more revenue than previously planned.
“This is great news for us. That was a big part of our business model,” said Anton Seals, a co-founder of infuser OURS in Chicago. “We had looked at edibles because that’s a growing sector, but how much it will grow is unknown. But still vapes dominate.”
Vapes are a large portion of Illinois cannabis sales. According to an August 2021 report from Headset, over 26% of cannabis purchases were for vape pens. Operators Grown In has spoken to say that figure still generally holds true.
Unlike most states, which have processor or manufacturer licenses, Illinois law created infusers, which are not allowed to extract oil. In addition, state law defines “cannabis-infused product” as “a beverage, food, oil, ointment, tincture, topical formulation, or another product containing cannabis or cannabis concentrate that is not intended to be smoked.” Furthermore, the law defines “smoking” as the “inhalation of smoke caused by the combustion of cannabis.”
This summer Illinois issued 54 infuser licenses, all of which are still in planning or building phases. Infuser licenses were originally supposed to be issued in summer 2020, but license issuance was held up by the pandemic and lawsuits against the state.
Last month, the Department of Agriculture, the agency that oversees infusion licenses, announced its first guidance on what products infusers can create, and disallowed vape cartridges at the time, because the agency ruled it a smoking product.
However, this week the agency reversed itself, stating that “vaping would not generally be considered ‘smoking’, so long as combustion is not required to vaporize the ‘cannabis-infused product’.”
Now that infusers are allowed to make vape carts, many license holders are ambiguous.
“The process has been so long that initially we were interested [in vapes], and then when they said no vapes or prerolls, we focused our business plan only on edibles. With [this week’s] revision, we’ll do a market and cost analysis to see if it fits. The cost of distillate is still very high compared to other markets,” said Allison Dries, co-founder of infuser Krown, Inc., based in Pekin, Ill.
“I feel that the market space is small and concentrated, so having a diversity of product is important for the longevity of any company. It isn’t part of our current business plan, but if things don’t come to fruition, it’s wonderful to be able to look at a second possibility,” said Kate Nadolski, co-founder of infusor Culinary Cannabis in north suburban Illinois.
“I think it really expands the potential offerings in a way that could grow the business long term. It adds some capability in some ways it wasn’t previously included in. It will still be really competitive. It’s very hard to compete on price and quality with cultivation centers. They can phenohunt for strains, as infusers we’ll be reliant on what they make available to us. That will be a challenge for us,” said Dries.
Alisa Brill, the CFO/COO of craft grower Drecisco Farms in Marengo, Ill, says that infusers getting the opportunity to sell vapes should increase the market for craft growers like her.
“I think it will help us eventually because we have the ability to extract an extra 600 lbs a day, and we’ll be able to sell distillate to infusers. Probably it will help us in the long run,” she said.
Infusers looking at how other states operate are pushing state legislators to change the law so they are allowed to process, said Seals, who participated in the state’s original cannabis legislative process in 2019.
“They should have just given processing to infusers to begin with. That would have been power for us if we could have made distillate ourselves. As it is, to stand up a location is going to be roughly $2.5 to 3 million just for infusing,” said Seals.