Cannabis industry executives, investors and stakeholders focused on New York and other fledgling markets primarily in the Northeast and Midwest should pay special attention to everything happening in Illinois right now.
Nearly four years after Illinois lawmakers approved adult-use sales through legislation designed to extend commercial cannabis licenses to “social equity” applicants, less than 5 percent of operators awarded retail, cultivation and manufacturing licenses today have their businesses up and rolling.
This hit rate on the surface indicates failure. However, when graded on a curve alongside developing programs that infused social equity considerations into adult-use expansion programs, Illinois comes out smelling like a green rose.
New York’s younger program that includes more progressive social equity provisions than Illinois is currently stalled due to battle lines drawn not only between incumbent and social equity operators but also the industry at large against the robust and generations-old illicit market. Similar imbroglios infused with state-specific issues are also occurring in New Jersey and Ohio (still medical only) among other developing marijuana markets. The Massachusetts program, which preceded Illinois in adult-use expansion via social equity provisions, remains hit and miss at best in delivering on its promise.
Accordingly, what’s happening in Illinois – also home to a critical mass of multi-state operators including Green Thumb Industries, Cresco LABS, Verano Holdings and Pharmacann (not to mention a good chunk of Curaleaf via its Grassroots Cannabis DNA) – is a good signal as to where New York and other developing markets are headed.
Based on four years of institutional memory and four months of running Cannabis Innovation Lab with Chicago business accelerator 1871 (year of the Chicago fire and rebuild), here is where I see the Illinois market today.
- The survival and prosperity of MSO’s operating in the state (which also include Ascend Wellness Holdings, MariMed and Jushi) depends on more newly licensed retail, craft grow and infuser licenses opening faster and being prepared to buy and sell more of their product. While the corporate cannabis lobbyists and social equity advocates continue to have their disagreements in Springfield – most notably this legislative session in differing on the creation of one Illinois agency to oversee finance, agriculture, medical and other industries that touch cannabis (supported by social equity and the Pritzker administration) vs. a committee-like structure with more public sphere and private sector inputs (favored by the industry) – on issues including badging, curbside pickups and most critically the professional advancement within the industry of those whose lives were derailed by previous drug laws they are squarely in sync. Commercially, large cultivators increasingly are selling biomass to startup manufacturers and growers finally making it to market. Gaining precious shelf space on the dozens of new retail dispensaries that will come online in the coming months is also a major priority for the large incumbent yet increasingly cash-crunched MSOs and single-state operators.
- While Chicago today can claim to be a commercial capital of Cannabis in the United States (alongside Denver), there is no guarantee that cannabis companies that are among the fastest growing in the state will maintain their leadership position in the years ahead. That would be a big miss, particularly for a new mayoral administration that is seeking buy-in from the business community while predicated on community-based solutions to social and economic problems. While the big MSOs are relative goliaths to new entrants in the market, they need greater collaboration with the general business, higher education and civic communities to make it through an economic period which for cannabis is similar than the post dot-com bubble days of 2001-2006 which I chronicled in an earlier life.
- Culturally speaking, most of the squeamishness some sectors of the population had when cannabis became recreationally legal in Illinois diminished early and often during the pandemic and functionally speaking have dissipated. Working in the industry is less taboo, enjoying a skunky joint rather than wine or scotch or whatever is more chic than reek, and music festivals like Lollapalooza are experiencing less public disruption as more attendees are vaping rather than binge drinking. The general public is there, the business community as illustrated by support from World Business Chicago, The Chicagoland Chamber of Commerce and other economic development agencies are also on board with bud. Despite commercial, legislative and federal challenges, a green wave is a comin’ and it may just be the remedy for anxious citizens concerned more about the rest of the issues impacting the city and state in 2023.