GTII:CC - You're Paying a Lot More for Weed in Illinois
This story was reprinted with permission from Crain’s Chicago and written by John Pletz .
Weed prices are beginning to fall in Illinois, but they’re holding up better than in most states.
Oversupply is pounding cannabis markets from Massachusetts to Michigan to California , and there are signs that some consumers have been trading down because of inflation.
Retail marijuana prices in Illinois have been among the highest in the nation because of a relatively limited number of stores since recreational weed became legal nearly three years ago. But retail weed prices are down 15% so far this year, Cantor Fitzgerald analyst Pablo Zuanic writes in a note to clients.
Although that’s steeper than the 13% decline in Pennsylvania and 12% drop in Florida, Illinois prices are still much higher: It costs $15.69 per gram on average in Illinois for smokable cannabis “flower,” which is 16% more than Pennsylvania and 43% higher than Florida, Zuanic says. Prices here are 62% higher than in Massachusetts.
If you’re looking for deals on weed, Cantor Fitzgerald says Curaleaf is the best bet. Its prices were about 18% below the average of other retailers.
Profits in Illinois also remain higher than elsewhere, with retailers here selling marijuana for 48% more than they pay to buy it from growers in the state. That works out to a gross profit of about $7.62 per gram in Illinois, compared with $4.62 in Massachusetts and $1.84 in Michigan, Cantor Fitzgerald says.
However, the spread between wholesale and retail prices in Illinois was 20% higher at the beginning the year, which is bad news for the holders of 185 new retail licenses who have yet to open their doors. Capital is drying up, the money available is now more expensive—and the margins are dropping.
That said, Illinois remains one of the best markets for selling legal weed because licenses are limited. The nation’s sixth-most populous state has just 110 retail licenses. Zuanic estimates that even if all 185 new stores open, Illinois will have fewer stores per capita than many states.
For growers – such as Chicago-based giants Cresco, Green Thumb Industries, Verano, and PharmaCann – prices are holding up even better. Wholesale prices are down about 7% from a year ago in Illinois, compared with a 35% drop in Massachusetts and 55% in Michigan, Cantor Fitzgerald estimates.
The data illustrate the disparity in approaches that Illinois and Michigan took to legalizing marijuana. Michigan has allowed far more licenses to growers and retailers. A year ago, the two states had roughly equal recreational sales . Now Michigan’s total sales are 49% higher: $195 million in September vs. Illinois’ $130.7 million.