Don’t bogart that supply, my friends
Monday, Mar 4, 2019 - Posted by Rich Miller
* Tribune…
Medical marijuana growers, once banned from making political contributions, are now spending money to influence the expected legalization of recreational cannabis in Illinois in an effort to keep that market to themselves — at least temporarily.
Leading members of the industry have formed a political action committee, hired a former state senator as a lobbyist and begun contributing to political office holders.
The aim is to limit cultivation licenses being issued to competitors if recreational pot is legalized. Critics say that would create a market that benefits a small number of growers at the expense of retail marijuana stores and the public. And it runs counter to two new studies that find that demand will race past the current capacity.
* Press release…
Lawmakers sponsoring legislation to legalize adult-use cannabis in Illinois released a study today showing that demand is likely to far exceed what the state’s existing licensed growers can supply.
The study, commissioned by State Senator Heather Steans (D-Chicago) and State Rep. Kelly Cassidy, found that demand could rise as high as 550,000 pounds of cannabis per year, highlighting the need for Illinois to expand its existing medical cannabis market to both meet demand and to diversify, allowing for the participation of more minority business owners.
“For generations, government policy of mass incarceration increased racial disparities by locking up thousands of individuals for marijuana use or possession,” said State Senator Toi Hutchinson (D-Chicago Heights), the legislation’s chief co-sponsor in the Senate. “Now, as we are discussing legalization, it is of the utmost importance that we learn from these mistakes and acknowledge the lingering effects these policies continue to have in neighborhoods across this state. No conversation about legalization can happen absent that conversation.”
The study, performed by the consulting firm Freedman & Koski, examined the current adult-use market in Illinois and concluded that the existing industry could only supply between 35-54 percent of its demand.
“We’re not just trying to add diversity because it looks good. It’s not just diversity for diversity’s sake. It’s for equity’s sake; equity includes economics, it includes criminal justice,” said State Rep. Jehan Gordon-Booth, who is the chief co-sponsor of the legislation in the House. “We’re talking about specific communities that need to be made whole. When this is all normal and nice and people are making money, we will not have succeeded if black people and other people of color are shut out.”
A clearer picture of demand also provides a better estimate of revenue; based on the study’s results, Illinois could expect approximately between $440,000 and $670,000 annually, not including the excise tax imposed on cannabis cultivators.
“While we should not expect cannabis sales to be a one-stop solution to Illinois’ financial woes, it is encouraging to see evidence that we are on the brink of establishing a thriving, robust industry to meet the demands of many Illinoisans who have until now been turning to the criminal market,” said Steans, the legislation’s Senate sponsor. “Prohibition does not work, and legalizing adult-use cannabis will bring those sales into the light and meet an obvious demand among the people of our state.”
The study cautions that initial regulatory costs will keep legal prices above illicit market prices, leading some consumers to continue making illegal purchases. Within the first few years, however, initial regulatory costs will decrease; economies of scale will push prices down; and the regulated market will capture or displace the criminal market, according to the report.
The study is here.
* Tribune…
The legislators’ report is the second one to conclude that Illinois will have a marijuana shortage if the drug becomes legal for general use. Illinois NORML says the state has the most expensive marijuana in the country and is already seeing shortages of some products for medical customers.
The study suggested licensing more cultivators and allowing existing dispensaries to begin growing marijuana, since they have already been vetted and authorized by the state to handle the drug. […]
Lobbyist Tim McAnarney of Healthy and Productive Illinois, which opposes recreational marijuana, said the report’s projections suggest a burgeoning black market when the drug is legalized. Homegrown pot, which would be allowed under some legislation, could become a ruinous mainstay, he said.
“I would anticipate that once the product is legalized, once it’s being grown in people’s homes, increased use is going to be devastating to the youth of Illinois,” he said. “The more available it is, the more it’s going to be used.”
Dude. C’mon.
NORML’s study, still in its draft form, is here. Headline explained here.
- Pot calling kettle - Monday, Mar 4, 19 @ 11:13 am:
Home gardeners are a big threat. Just ask anyone in the produce industry.
- PJ - Monday, Mar 4, 19 @ 11:17 am:
There was always going to be a period of exclusivity for current growers. These people have been taking a massive loss on the artificially restricted medical market for years in anticipation of this opportunity. If they didn’t think they’d get a window of exclusivity, it would never have made financial sense to open a business for a tiny market that the restrictive medical law and IDPH handicapped beyond reason. What makes the most sense to me is allowing them to produce for recreational immediately upon passage, while new growers will have to wait out the red tape the medical folks already worked through.
- Grandson of Man - Monday, Mar 4, 19 @ 11:18 am:
Per this study of teen use in medical marijuana states, teen use went down even when recreational use was legalized.
https://www.eurekalert.org/pub_releases/2019-02/tfg-tli021119.php
So Refer Madness continues for legalization opponents. We will hopefully soon make it where the Reefer Madness crowd will no longer have a legal say in marijuana. The paranoia is way worse than any experienced from marijuana itself.
- Altgelds Ghost - Monday, Mar 4, 19 @ 11:25 am:
PJ,
These poor folks whose cause you are taking up. didn’t they understand they were applying for a pilot program? Didn’t the process clearly state it was only for medical cannabis? Where did anyone from the state tell the applicants that participation in a medical cannabis pilot program would allow them clear entry into a recreational program? The state should remove the pilot from the medical program and allow the licensees to continue then issue new licenses for the recreational program. It’s called free enterprise.
- Thecannacrat - Monday, Mar 4, 19 @ 11:26 am:
High taxes and no reasonable home grow provision will keep the black market alive and well. Criminal justice reform and personal liberties should be taking the lead in legalization/decriminalization, any real tax money raised thru legalization should be a side effect.
- Anonymous - Monday, Mar 4, 19 @ 11:30 am:
I want to see some of these operations set up in the economically distressed areas of the state, like down in Little Egypt. Kick start some local economic development and tourism. Industrial hemp, too.
- ChrisB - Monday, Mar 4, 19 @ 11:33 am:
Man, this sounds analogous to taxi cabs.
I hope someone at 1871 is working on an Uber for weed, so some SF startup doesn’t crash our party.
- Juvenal - Monday, Mar 4, 19 @ 11:36 am:
In HPI’s defense, we all remember when they started allowing people to grow their own vegetables and teen broccoli use skyrocketed. #BroccoliMadness
- Rich Miller - Monday, Mar 4, 19 @ 11:43 am:
===These people have been taking a massive loss on the artificially restricted medical market for years in anticipation of this opportunity===
Not my problem.
- don the legend - Monday, Mar 4, 19 @ 11:47 am:
==Lobbyist Tim McAnarney of Healthy and Productive Illinois, which opposes recreational marijuana, said the report’s projections suggest a burgeoning black market when the drug is legalized. Homegrown pot, which would be allowed under some legislation, could become a ruinous mainstay, he said.==
Some days it must be really difficult to advocate for your paying client.
- PJ - Monday, Mar 4, 19 @ 11:52 am:
==The state should remove the pilot from the medical program and allow the licensees to continue then issue new licenses for the recreational program.==
That’s exactly what I advocated for. The time lag between passage and the construction/certification of new growth facilities provides an exclusivity window. Glad we agree.
==Not my problem.==
Indeed. And I’m not even arguing for the morality of making them whole. I’m just saying that the legislators care, and it’s going to happen.
- Pot calling kettle - Monday, Mar 4, 19 @ 11:56 am:
==In HPI’s defense, we all remember when they started allowing people to grow their own vegetables and teen broccoli use skyrocketed==
Don’t even get me started on the folks with home grown tomatoes. And the home salsa makers…
- Norml_fan - Monday, Mar 4, 19 @ 11:57 am:
I think the report authored by the consultants hired by the legislators is woefully low. They used govt survey data to arrive at the number of expected customers as well as a similar percentage of annual tourists. They say ~600,000pds a year.
ILNORML report says double that. 1.3million pds/year. If the legislators use their numbers and the ILNORML numbers are more accurate, there is not going to be enough produced to meet demand.
While it will be good for keeping prices sky high [not that is good as it will explode the black market even futher]; the dispensaries will have major problems keeping items stocked. If people go to a store with limited options or nothing for sale; all the tax revenue that would be realized from those sales is now missing as no sales take place.
Its a mathematical certainty that the current growers cannot supply millions of people and it is further a certainty that millions of customers will be looking to buy legal pot once it is legal for them to do so. Since both adult-use and medical people will be using the same dispensaries; when one runs out both run out and then people who are really sick or fighting cancer go downhill and some are likely to die.
We need hundreds and hundreds more growers and hundreds if not a thousand or more retail outlets to sell it at OR the program is likely to face severe shortages, outages,long lines at dispensaries resulting in unrealized sales, medical patients who need this will be harmed.
IL is surrounded by states with crappy cannabis laws. Indiana, Iowa, Kentucky, etc…customers will come here and they will buy product. If there is product for sale. If not, then legalization will fail and the black market will boom.
It is ALWAYS better from a consumer standpoint to have more production than needed than to have less than required. Err on the side of over production. That flower product can be made into oils and concentrates with a very long shelf life. It will sell in the future. But you can’t sell what does not exist.
- Blue Dog Dem - Monday, Mar 4, 19 @ 11:57 am:
I thought the original article stated $440 million to $670 million. But even the article stated those projections as optimistic
- Norml_fan - Monday, Mar 4, 19 @ 12:03 pm:
One quick word on taking massive losses: That is not true. The licensed operators have sold over 270million worth of medical products at retail. But what about wholesale? Over 100million. BUT and this is important, half the legal dispensaries are owned in whole or in part by the cultivators.
So they are selling at wholesale to themselves and then jacking up the price at retail. ALL of the major players (GTI, Cresco, Ataraxia, Pharmacann, etc..) are actively expanding into many states. They don’t get to cry poor and then build cultivation facilities in 5 other states and have nationwide profiles. It don’t work that way.
- JS Mill - Monday, Mar 4, 19 @ 12:03 pm:
=“I would anticipate that once the product is legalized, once it’s being grown in people’s homes, increased use is going to be devastating to the youth of Illinois,” he said. “The more available it is, the more it’s going to be used.”=
That is restaurant quality dumb.
- XonXoff - Monday, Mar 4, 19 @ 12:15 pm:
– There was always going to be a period of exclusivity for current growers. –
Nobody forced them to place their bet on “medical” marijuana in IL. And AFAIK there’s no exclusivity guarantee in the event of a more broad adult use market developing.
If there is some such legal obligation to them, someone should also let Gov. Pritzker know.
I’m certainly not against the existing medical production/distribution companies “participating” in a responsible adult use market – if they can make that all work internally and compete – but this whole exclusiveness thing and formation of lobbying groups and such smacks of nothing more than greed. In California they called it “I got mine.”
They will already have a significant leg-up but apparently some of them would rather just have it all. I think it’s at least fair to get those company names onto a list so all these potential new customers can make an informed buying decision.
- wordslinger - Monday, Mar 4, 19 @ 12:15 pm:
Sounds like there should be plenty of opportunities for the little guy, akin to craft brewers.
It’s going to take vigilance and heat on Pritzker and the GA to keep the weed equivalents of A-B InBev and SABMiller from dominating production and distribution.
- truthteller - Monday, Mar 4, 19 @ 12:17 pm:
no study has shown that teen use has risen in states that have legalized medical/recreational pot. Simple scare tactics as usual more often than not by those with vest interest in OPPOSING legalization like police unions, prison guard unions, lawyers, Big Pharma AND bar/restaurant owners…..
- A 400lb. Guy on a bed - Monday, Mar 4, 19 @ 12:29 pm:
Steve Pearce just said that the New Mexico GOP is against pot, so at least there’s that.
- vole - Monday, Mar 4, 19 @ 12:35 pm:
NORML’s demand estimates for Illinois residents is based on annual usage of nearly 9 oz/consumer.
9 oz. of one-hit-weed (high THC) seems like, well, on into Willy Nelson land — “roll me up and smoke when I’m gone.” Most of us ain’t got a bus driver to get us on the road again.
- @misterjayem - Monday, Mar 4, 19 @ 12:41 pm:
“I would anticipate that once the product is legalized, once it’s being grown in people’s homes, increased use is going to be devastating to the youth of Illinois.”
When you’ve got no data, anticipate.
– MrJM
- Last Bull Moose - Monday, Mar 4, 19 @ 12:42 pm:
Legal weed should be cheaper than illegal weed. The interdiction efforts should drive up the cost of illegal weed.
The goal should be on breaking the cartel distribution and marketing networks. State revenue is a secondary objective.
- Rich Miller - Monday, Mar 4, 19 @ 12:51 pm:
===The interdiction efforts should drive up the cost of illegal weed===
Yeah, but legal weed has state regulations. Illegal dealers don’t have to worry about precise rules on packaging, labeling, distribution, sales etc.
- vole - Monday, Mar 4, 19 @ 12:56 pm:
In the event of shortages, perhaps Illinois residents should have rights of ration. Billboards at the borders: pass Illinois and go straight to Denver or Kalamazoo.
- Just.. - Monday, Mar 4, 19 @ 1:08 pm:
“NORML’s demand estimates for Illinois residents is based on annual usage of nearly 9 oz/consumer.
9 oz. of one-hit-weed (high THC) seems like, well, on into Willy Nelson land — “roll me up and smoke when I’m gone.” Most of us ain’t got a bus driver to get us on the road again. ”
Which is averaged to a little more than a half of one gram a day, and probably less than Willy has in his belly button at any given time.
One also has to remember, that includes concentrates and extracts, which are a much lower yield. 5 pounds of flower to create one pound of extracts, more or less, and then further reduced to isolate, which is then introduced into a larger amount of lower dose products.
Meaning, the actual consumption is not 9 oz annually per user on average, but possibly considerably less when factoring the above.
- Smitty Irving - Monday, Mar 4, 19 @ 1:11 pm:
Based upon how bollocksed up medical marijuana is, please keep Lou Lang away from the design / drafting of the legislation.
- Steve Polite - Monday, Mar 4, 19 @ 1:14 pm:
I do not currently purchase illegal marijuana. Once it is legalized I will be a regular consumer. How many others are there like me who will increase the demand?
- Hieronymus - Monday, Mar 4, 19 @ 1:20 pm:
So many business entities believe that they have a God-given right to a perpetually profitable business model, courtesy of winner-picking legislatures and regulations.
They then turn around and with practically the same breath start whinging that other policies such minimum wages, employee health insurance mandates, etc., interfere with the workings of the “free market”.
- regnaD kciN - Monday, Mar 4, 19 @ 1:21 pm:
We should not expect supply to meet demand during the first week of legalized cannabis. If we do, then there is an oversupply and the oversupply would likely find it’s way to the black market.
While I personally would like to see home grown, I’m not sure it should be allowed in the beginning but if it is, I believe it should only be for those with medical marijuana cards and in a statewide database that law enforcement can easily check/verify. Why? Because states like Colorado that allowed home grown saw instances where organized gangs went into homes and legally grew their cannabis and then took the product out for the black market and the State didn’t get any revenue out of that source. As noted by others, our surrounding states have archaic cannabis laws and there are certain locations in Illinois that would be advantageous for gangs to take advantage of the situation as they did in Colorado. I think you could allow home grown for everyone if you give it a couple of years to get established, prices to drop, and the time to weed out the black market.
- efudd - Monday, Mar 4, 19 @ 1:27 pm:
A “burgeoning black market” “the more available it is”-For the love of Pete, man.
As a child of the late seventies/early eighties there has never been a shortage of weed, or the availability of such. The black market has been burgeoning for some time now.
Much like gay marriage, a hundred years from now generations will look at this inane stance the way we look at womens’ suffrage today, by asking what in the world were some people thinking.
- TheGoodLieutenant - Monday, Mar 4, 19 @ 1:39 pm:
== weed out the black market ==
I see what you did there.
- wordslinger - Monday, Mar 4, 19 @ 1:42 pm:
–The link between tobacco smoke and lung cancer is well-known. Studies show that marijuana smoke has many of the same harmful substances as tobacco, and often more of them. Some great medicine you got there.–
This message brought to you by Prohibitionist Friends of Murderous Gangsters.
- regnaD kciN - Monday, Mar 4, 19 @ 1:48 pm:
–The link between tobacco smoke and lung cancer is well-known. Studies show that marijuana smoke has many of the same harmful substances as tobacco, and often more of them. Some great medicine you got there.–
Edibles is the growth market; smoking still there but because of the health concerns, use likely to decline in the future.
- XonXoff - Monday, Mar 4, 19 @ 1:50 pm:
– Because states like Colorado that allowed home grown saw instances where organized gangs went into homes and legally grew their cannabis and then took the product out for the black market and the State didn’t get any revenue out of that source. –
They also initially allowed 99 plants per person, potentially more in justified circumstances, and they also allowed people to form cooperatives, combining their individual plant counts.
Colorado has dialed that all back to 6 plants per person and 12 plants per residence now. At 5 plants per household in Illinois you’re not going to have many cartels buying houses to setup a 5 plant grow. And if they buy houses to setup a full-on grow house over the 5 plant limit, make your case and arrest them. That would be against the law. But don’t think you’ll ever starve the cartels out of IL on cannabis without a reasonable personal home grow option.
- A Jack - Monday, Mar 4, 19 @ 2:00 pm:
People can grow weed in their basements now. You have been able to mai order the seeds forever. But its a lot of work and considerable expense if you want to buy the lights. I don’t see a huge increase in home grown. Probably the people who already have have home grown set ups will continue to do so, but their market share will dwindle as users turn to quality controled product.
- Blue Dog Dem - Monday, Mar 4, 19 @ 2:13 pm:
I havent followed Californias legalization that closely, but has its pot black market been reduced or eliminated?
- Anonymous - Monday, Mar 4, 19 @ 2:35 pm:
Nuthin’ is one hundred percent…a black market for Applejack still exists.
How many people purchase Shine on the black booze market…I wonder?…percentage wise?…betting on minuscule.
It seems to me… the growers/sellers want to wring every drop out of The Plant.
Do we owe them?…?
- TheGoodLieutenant - Monday, Mar 4, 19 @ 2:44 pm:
== I havent followed Californias legalization that closely, but has its pot black market been reduced or eliminated? ==
I think it is going to take some time in Cali considering their glut of the greenery.
https://www.nytimes.com/2019/01/02/us/buying-legal-weed-in-california.html
- Pot calling kettle - Monday, Mar 4, 19 @ 2:50 pm:
==People can grow weed in their basements now. You have been able to mai order the seeds forever. But its a lot of work and considerable expense if you want to buy the lights. I don’t see a huge increase in home grown. Probably the people who already have have home grown set ups will continue to do so, but their market share will dwindle as users turn to quality controled product.==
Once it’s legal, I would expect folks to put a few plants in the back yard. Saves a lot on cost.
- Kelley - Monday, Mar 4, 19 @ 3:26 pm:
Once it’s legal, I would expect folks to put a few plants in the back yard. Saves a lot on cost.
- Pot calling kettle
How many people grow their own apples?…tomatoes?
No enough to affect business profits…that’s for sure.
How many people will grow marijuana?…never enough to negatively affect business profits from marijuana sales.
Corporate marijuana sellers will be fine.
That’s…like…you know…my opinion, man.
- XonXoff - Monday, Mar 4, 19 @ 3:31 pm:
– I think it is going to take some time in Cali considering their glut of the greenery. –
It’s only been a year but the “risk premium” for the black market has absolutely dwindled “in” Cali. However, if you take that ~$1100 pound that used to be worth ~$3500 in Cali, and somehow get it to a state like Illinois, it’s worth ~$3500 again – at least until Illinois and other states make aggressive changes to reduce their own risk premiums.
- Smitty Irving - Monday, Mar 4, 19 @ 4:02 pm:
Wordslinger -
Politely, must disagree. The concensus of the medical community is medical marijuana, if at all possible, should not be smoked but otherwise ingested.
- Dazed & Bemused - Monday, Mar 4, 19 @ 4:16 pm:
So the Cannabis folks hired a Republican State Senator to go work over the newly elected Democratic Gov and the Democratic super majorities in the House and the Senate. Stop smoking your product, gentlemen.
- Winderweezle - Monday, Mar 4, 19 @ 4:32 pm:
– I think it is going to take some time in Cali considering their glut of the greenery. –
There has been a glut of cannabis in Cali for longer than a year. Their medical law was designed for abuse.
The Cali medical law put the British Columbia growers/exporters out of business.
Growers there have survived by pumping it into Colorado until Colorado growers could catch up. Part of how Colorado caught up with demand is the Florida based trafficking orgs that immediately moved toColorado and set up large illegal grows. (Those orgs are now moving to Michigan and have been for a couple years)
When Colorado got flush and became an exporter again, the Cali growers did what any farmer would do. Take the fence rows out and grow more corn. Or, market high quality specialty crops like hash and vape oil.
Yet the price just keeps dropping.
It’s all quite interesting I think. And I think after the initial boom, this will eventually be a tough business to be in without the government helping to keep the growers in business. I bet the farmers of Illinois can relate.
- Anonymous - Monday, Mar 4, 19 @ 5:08 pm:
So what if there is a “glut’ of marijuana…let the free market decide.
The only thing marijuana consumers have to fear are lower prices.
Corporate marijuana sellers (who pay the State of Illinois big bucks to grow/sell) fear for their profit margin.
My mind is still stuck like a toggle switch…caught between Illegal seller of a legal product…vs…Legal seller of a legal product.
Paying the State of Illinois is the only difference?
- XonXoff - Monday, Mar 4, 19 @ 5:37 pm:
– Paying the State of Illinois is the only difference? —
I wouldn’t say it’s the only difference but if you can’t swing the initial entry fee none of the associated regulatory differences matter.
- Rabid - Tuesday, Mar 5, 19 @ 2:02 am:
Lobbyist Tim hides behind children like the dare program did
- suntzu - Tuesday, Mar 5, 19 @ 12:01 pm:
550k in the Colorado report is 10% less than Colorado demand per year but Illinois has over double the population and more tourism. NORML numbers look to be more accurate. Of course the medical lobby has bought and paid for their monopoly so they won’t be happy to see that and are pushing to stop home grows so people HAVE to buy from them…. Only in Illinois. This could end up being the greediest implementation of rec weed yet.