In 2023, the state of Illinois raked in billions in recreational cannabis sales. This is despite the fact that prices in the state are among the highest in the country. In total, Illinois raked in more than $1.5 billion in sales, with more than 42 million products being sold at dispensaries throughout the state. This brought in about $400 million in recreational cannabis tax revenue.
Tax revenue from sales is allocated to a number of departments in the state, among them substance abuse, criminal justice prevention programs and public health.
Illinois also reported that marijuana sales to residents hit a new high at more than $1.2 billion, which represents a 15% increase from figures recorded in 2022. Data from the Marijuana Policy Institute shows that legal marijuana tax in the state is among the highest in the country, covering roughly 40% of the sale price.
In the Midwest, Illinois is the most-expensive legal recreational cannabis market. On average, an ounce of high-quality marijuana in the state costs about $25 more than the country average.
Since launching in 2019, recreational cannabis sales and tax revenue for the state has grown significantly. However, with more states in the Midwest engaging in discussions to legalize cannabis, Illinois may soon lose revenue to other states as well as its grip on market share.
States such as Michigan are already gaining momentum, as an ounce of high-quality weed is about $65 less.
Availability and inventory also play a crucial role in the higher prices in Illinois. Grown In’s publisher, Brad Spirrison, explained that Illinois had limited cultivators and dispensaries because of licensing issues, which allowed dispensaries to charge higher prices because of booming demand and limited supply.
It is expected that an increase in competition will facilitate a drop in the price of recreational cannabis in the state. However, with the imposition of strict regulations that are crippling sellers and growers, industry leaders worry that some businesses may file for bankruptcy or exit the field entirely, which would impact the state’s sales revenue. This may also deter investment companies from supporting the industry.
Overall, states that have imposed higher rates include New York, Washington, California, Alaska and Nevada. In Alaska, the average price of an ounce of cannabis has risen to more than $300.
It isn’t reliable to compare recreational marijuana prices directly because most states have different styles and brands sold in the dispensaries, so the analysis used medium-grade cannabis as a comparison, as it is sold in the country for both price and potency.
The resilience and success registered by cannabis companies such as Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF) in Illinois shows that the industry can thrive when given an opportunity, and actors in the space can evolve to suit the changing conditions in the market.
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