Cannabis Market Study: Illinois Ready to Meet Initial Demand for Legal Adult Use

 

[March 22, 2019] 

As policymakers at the Capitol continue earnest discussions on legal adult use of cannabis, a new study confirms Illinois’ medical cannabis providers will be ready to meet initial consumer demand.

The Medical Cannabis Alliance of Illinois, representing the cultivation centers and dispensaries participating in the Medical Cannabis Pilot Program, hired the Marijuana Policy Group out of Colorado to look at Illinois’ potential market demand from expanding to adult use.

The study found:

* - Total demand is 334,235 pounds of flower equivalent, or more than 151 metric tons, from Illinois residents and tourists. First-year regulated market capture is expected to be 206,694 pounds, assuming successful implementation.

* - Cultivation space to meet the demand in the first year will be 555,574 square feet – less than the 873,689 square feet already in use or approved by Illinois under medical cannabis. That cultivation space need will reach between 1 million and 1.5 million square feet when the market reaches its full maturity

* - As long as Illinois can successfully roll out licensing of cannabis providers, it should capture up to 62 percent of total demand in the first year with the market reaching full capacity in about five years

* - Illinois will need an estimated 463 retail licenses initially. Now there are 55 licensed medical cannabis dispensaries, or about 11 percent of the expected need with adult use

* - Illinois has fewer heavy cannabis consumers than other states, at about 2.4 percent of the adult population. Colorado (8.7 percent), California (4.7 percent), Oregon (10.1 percent), Indiana (3.2 percent) and Wisconsin (2.5 percent) are all higher. Demand from heavy consumers generally accounts for about 75 percent of the adult use market

The study’s authors also emphasize important licensing and regulation questions for policymakers. They need to balance the benefits of open free-market competition and increased legal market capture with the potential costs from illegal market diversion, oversupply and volatile prices. Overly restrictive licensing will drive up prices and allow the illegal market to continue to thrive, while under regulation – as seen in Oregon – will lead to drastic oversupply and higher risk of diversion.

This report mirrors some of the findings in a recent study released by legislators working on adult use legalization.

Both studies agree the current medical cannabis industry can supply the first two years of the adult use market without expanding current cultivators. But the earlier Freedman study removes existing space in calculating required cultivation space, resulting in mistakenly low figures for the ability of the medical cannabis market to meet increased demand under adult use.

The Freedman study also neglects to recognize the presence of a small heavy-consumer population; overcounts visitors who originate from other parts of Illinois that already are counted as residents; and does not adjust for minors or international visitors who generally consume cannabis more infrequently than Americans.

MCAI is confident adjusting for these miscalculations will bring both studies into agreement: current medical cannabis cultivators can meet adult use demand for three and potentially a full four years without expansion.

Pam Althoff, a former state senator now leading MCAI, said the Alliance hopes these results answer questions about Illinois’ readiness for adult use demand and about the medical cannabis industry’s desire to work with legislators and Gov. Pritzker on a plan to make Illinois’ adult use program rollout the most successful our nation has seen.

“This report confirms what we have known for years: our members have the expertise, security, licensing and economic means to make Illinois’ expansion into adult use of cannabis something we can be proud of,” Althoff said. “We hope the study will clarify misinformation about our facilities and help us all focus on creating an adult use program that embraces economic opportunity, safety and social justice. We’re ready to be an important part of the equation for the nation’s best adult use program.”

[RK PR Solutions]