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Report: Illinois cannabis among the highest priced, with least brand options

Monday, Jul 31, 2023 - Posted by Isabel Miller

* Crain’s

The Illinois marijuana market is one of the most expensive in the nation and among the smallest as far as the number of brands – but it also offers plenty of opportunity for entrepreneurs, according to a new report from Seattle-based Headset.

Despite the size of the Illinois cannabis landscape – “one of the largest markets in the country,” the report begins – it’s surprisingly homogenous and dominated by just a handful of brands, which keeps prices artificially high compared to other states, Headset reported.

Illinois has just 118 active cannabis brands, and only 10 of those brands account for 68% of sales, Headset found, putting it “dead last” nationally as far as brand diversity. That’s almost 53% fewer brands than Arizona, which came in second for the fewest cannabis brands and is also mostly vertically integrated, similar to Illinois’ market structure.

By contrast, Washington state has more than 1,000 cannabis brands.

More facilities are coming online, so hopefully that’ll bring down prices.

* From the report

As of June 2023, Illinois has some of the highest cannabis prices in the country. Illinois’ average item price is 46% higher at $33.82 than the second highest Massachusetts and has a 36% higher price per gram ahead of Nevada. The high vertical integration coupled with the small brand selection likely contributes to a situation where prices are allowed to stay relatively high. Compare that to Washington State which has well over a thousand distinct brands versus 118 in Illinois. Additionally, Washington has some of the lowest prices in the country with an average item price that is 61% less than in Illinois. A strong contrast between mature and emerging markets.  Poor access is another factor likely contributing to expensive cannabis. This spring Illinois only had 118 operating retailers compared to several hundred in states with equal or smaller consumer bases. This number is comparable to the number of retailers in Maryland’s medical cannabis program prior to their July 1st adult-use launch.

*Equivalized quantity (EQ) price is the price per gram for inhalable products

Examining the average item price (AIP) and equivalized quantity (EQ) price in Illinois versus the rest of the US we can see that prices are falling across the board. The AIP in Illinois is currently 89% higher than the rest of the US market and EQ Price is 97% higher. In the last year, EQ price has dropped 26.8% compared to 17.3% nationally. AIP is much more stubborn, with the rate of compression being slower than the rest of the US market. Moving to value-driven formats (more THC per dollar) maybe be the cause of the rapidly falling EQ prices.

* Some interesting stats

While Millennials make up 45% of total sales, there is a higher Baby Boomer and Gen X representation in the Illinois market. Consumers over the age of 41 typically account for 36.4% of sales, however, in Illinois they capture 42.1% of total sales. There is also a slight skew towards women compared to the national market.

       

34 Comments
  1. - TheInvisibleMan - Monday, Jul 31, 23 @ 10:38 am:

    Medical uses aside, I have a very hard time being concerned about the price complaints on a luxury product.

    “This Rolex is too expensive”


  2. - Lucky Pierre - Monday, Jul 31, 23 @ 10:44 am:

    This is one instance where I 100% support high taxes.

    Most certainly high taxes and heavy regulation have the effect of reducing competition in the industry

    “Illinois taxes legal cannabis with some of the highest rates in the country, with up to 40% over the sale price, placing the state 2nd in the U.S, behind California.

    Michigan, for comparison, taxes cannabis at 10%.”

    https://wgntv.com/news/illinois-recreational-marijuana/illinois-marijuana-tax-revenue-is-the-highest-in-the-country-next-to-california/


  3. - Lucky Pierre - Monday, Jul 31, 23 @ 10:52 am:

    Are beer, wine and spirits also “luxury products”?

    The tax rate on Dom Perignon and Boone’s farm are the same


  4. - TheInvisibleMan - Monday, Jul 31, 23 @ 10:53 am:

    “For medical patients”

    Literally the first 3 words in my post.

    Med patients also don’t pay the same taxes as rec, so spare me the talking points.

    I just picked up 3 individually packaged 3.5g products last week, of what has over time become my favorite brand, for $30 each.

    I get the overwhelming sense there will always be price complaints until it is given away for free. If you want it to be free, get a medical card and grow your own.


  5. - Hannibal Lecter - Monday, Jul 31, 23 @ 10:54 am:

    === I have a very hard time being concerned about the price complaints on a luxury product. ===

    Luxury product?

    The fact of the matter is that other states with legal weed have significantly lower prices than we do. Some of that is due to the taxes, but the pre-tax prices are also significantly higher. For prices to drop, we need more stores to provide competition.


  6. - MaddyMoon - Monday, Jul 31, 23 @ 10:55 am:

    every store in the suburbs is running daily specials with huge mark downs. competition is a beautiful thing


  7. - Thomas Paine - Monday, Jul 31, 23 @ 10:57 am:

    @TheInvisibleMan -

    I guess maybe you are forgetting that part of the reason we legalized cannabis was to eliminate the illegal drug dealing.

    Or maybe you don’t understand that when legal cannabis costs 25% more than what it costs from “Grow Your Own Joe”, people are gonna buy it from their friend Joe.


  8. - Rich Miller - Monday, Jul 31, 23 @ 11:01 am:

    ===people are gonna buy it from their friend Joe. ===

    Joe has one option for sale. The dispensary has dozens and it’s quality controlled.


  9. - New Day - Monday, Jul 31, 23 @ 11:05 am:

    “among the smallest as far as the number of brands”

    World’s tiniest violin…


  10. - SIUEalum - Monday, Jul 31, 23 @ 11:22 am:

    I have plenty of complaints about how Illinois has rolled out both the medical and recreational programs. I still think going slow is better than an Oklahoma-style free for all.


  11. - Suburban Mom - Monday, Jul 31, 23 @ 11:23 am:

    I love that our drug panic headlines are now, “Too expensive, not enough brands.”


  12. - Proud Papa Bear - Monday, Jul 31, 23 @ 11:28 am:

    My friends and I (in our 40s) are probably typical of casual users. We’re so new to this that we couldn’t tell the difference among brands as we do among beers.
    Also, we use it so infrequently that a few more bucks over a long term doesn’t mean much.


  13. - Leap Day William - Monday, Jul 31, 23 @ 11:44 am:

    As a moderately regular consumer of edible products, I feel the lack of brand diversity leads to a lack of product diversity, meaning my local dispensaries aren’t selling things I’d like to have that I’ve picked up in other states (like infused sodas).

    That said, the prices aren’t really a barrier to me because a $30 pack of gummies that will last me a month is a pretty good buy in my book. I don’t mind the higher prices and the better quality, and I definitely am fine with the tax rate. I’m surprised Michigan didn’t see our 30+% rate and raise theirs from 10% to 15% because clearly the market will bear that cost and it would print money for them.


  14. - Friendly Bob Adams - Monday, Jul 31, 23 @ 11:47 am:

    On the demographics: I’m a Medicare age individual, and my observation is that most of the customers at my local pot shop are more or less in my age group.


  15. - Al - Monday, Jul 31, 23 @ 11:52 am:

    More concerned about who the owner operators are which is a State Secret due to the passed in the night unread 660 page Cannabis Statute. Sunshine.


  16. - Candy Dogood - Monday, Jul 31, 23 @ 12:11 pm:

    ===The Illinois marijuana market is one of the most expensive in the nation===

    This is by design. We literally banned the option of legally growing your own plants at home because of routine sky is falling claims from law enforcement, and because it protects the industry allowing people to turn a tidy profit.


  17. - duck duck goose - Monday, Jul 31, 23 @ 12:16 pm:

    Illinois’ approach to cannabis has been awkward. Generally, when a government legalizes something in order to thwart a black market, the legalization comes with additional penalties and disincentives for the black market. Illinois went the other direction–it created a legal market and incentivized the black market by reducing penalties and enforcement. There are obvious economic consequences to this approach.


  18. - TheInvisibleMan - Monday, Jul 31, 23 @ 12:38 pm:

    “have significantly lower prices than we do.”

    Yes. I occasionally hear stories about people spending $60 or more in gas to drive to Michigan, to ’save’ $40 on the cannabis they are buying.

    Competition is fine. However, quantity does not equal quality. I tried a different brand a few months back, and it was atrociously bad. Some friends in Wisconsin take trips up to Iron Mountain MI, and I was able to partake with them while visiting this summer. It just didn’t compare quality wise.

    You’ll notice none of these complaints in stories like this are about quality. It’s always about price.

    My perspective is based on not being arrested for it. Everything else is gravy.


  19. - Dotnonymous x - Monday, Jul 31, 23 @ 12:39 pm:

    Legal pot is overwhelmingly White…Pot prisoners are overwhelmngly Black and Brown…see how that works?


  20. - Rich Miller - Monday, Jul 31, 23 @ 12:42 pm:

    ===There are obvious economic consequences to this approach===

    Yeah, more people can work because they’re not being arrested for ingesting a common plant.


  21. - TheInvisibleMan - Monday, Jul 31, 23 @ 12:43 pm:

    –when legal cannabis costs 25% more than what it costs from “Grow Your Own Joe”–

    Yeah, and moonshine is cheaper than going to a liquor store.

    Which was certainly a thing for many years even after prohibition ended on alcohol. Some people just do it out of habit, not because the benefits outweigh the risks.

    Nobody is coming over to a dispensary like grow your own joes house angry at him for shorting them on some other stuff he sells, and willing to shoot up the place while I’m there. It’s not a large risk, but its a risk that doesn’t exist at a dispensary.

    I don’t care about the black market, it will literally always exist. It’s not a justification for anything in the retail space. There’s still a black market for cigs and those have *always* been legal.


  22. - Rich Miller - Monday, Jul 31, 23 @ 12:46 pm:

    ===Everything else is gravy===

    Exactly. But, yeah, it’s fine to debate the gravy’s price, etc. Just keep it in perspective that we’re debating gravy, not the meat and potatoes.


  23. - Dotnonymous x - Monday, Jul 31, 23 @ 12:46 pm:

    CRT on display…when pot is illegal… Blacks suffer…in prison cells.

    When legalized…Whites prosper…in private jets.

    See it or be blind as a bat… at midnight on a dark Moon.


  24. - ;) - Monday, Jul 31, 23 @ 12:55 pm:

    Illinois has the worst weed law and industry in the nation, it is atrocious.


  25. - Dotnonymous x - Monday, Jul 31, 23 @ 1:25 pm:

    “I have always loved marijuana. It has been a source of joy and comfort to me for many years. And I still think of it as a basic staple of life, along with beer and ice and grapefruits – and millions of Americans agree with me.” –Dr. Hunter S. Thompson

    Weed should be made available wherever other common staples are found…just my opinion.


  26. - Torco Sign - Monday, Jul 31, 23 @ 2:10 pm:

    He is angling to take over for Brad Schneider in Congress, but State Rep. Bob Morgan isn’t helped by this. He’s the former pot czar and is a law partner for a firm dealing with marijuana law. His “expertise” has given Illinois higher prices, few options, and no equity. Brutal.


  27. - D0 - Monday, Jul 31, 23 @ 2:34 pm:

    I don’t drive out of my way to get cheaper weed. But like how I buy gas while outside of the city and alcohol while in Wisconsin, I now stock up on weed in Michigan. Not only is it at least 25-50% cheaper, the experience far exceeds ours. You can see and smell product you’re buying with the help of an informed budtender. We messed this up. Hopefully someday we can get some reforms.


  28. - Dotnonymous x - Monday, Jul 31, 23 @ 3:50 pm:

    Less expensive products are not cheap…or cheaper…pet peeve wise.


  29. - Good for the goose... - Monday, Jul 31, 23 @ 4:12 pm:

    === I have a very hard time being concerned about the price complaints on a luxury product. ===
    If it is a luxury product so is booze so tax it the same and I will have no problem.


  30. - Wut - Monday, Jul 31, 23 @ 4:20 pm:

    The flower is still gonna give you lung issues.


  31. - Dotnonymous XL - Monday, Jul 31, 23 @ 4:42 pm:

    -The flower is still gonna give you lung issues.-

    Show your proof?


  32. - We've never had one before - Monday, Jul 31, 23 @ 5:09 pm:

    Where’s the kief?

    I miss the simple things…


  33. - TheInvisibleMan - Monday, Jul 31, 23 @ 5:10 pm:

    –tax it the same and I will have no problem.–

    You mean by taxing the distributors first, so the customer doesn’t see the full amount of taxes being paid at the register?

    Sounds good to me.

    Just FYI - the tax on a $10 1.75L of cheap walmart vodka easily exceeds the tax on cannabis by percentage.

    The tax is $8.55/gal for alcohol above 20% ABV, according to the Liquor Gallonage Tax listed on the department of revenue website.

    That $10 price for vodka on the shelf, already includes about $4 of taxes. $6 of vodka, and $4 of taxes, translates to about an 80% tax.

    Price aside, this is the reason I also have little patience for those complaining about cannabis taxes.


  34. - TheInvisibleMan - Monday, Jul 31, 23 @ 7:29 pm:

    doh

    That should be 66% in taxes, not 80%, in my last comment.

    Point still stands.


Sorry, comments for this post are now closed.


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