Are Midwestern adult-use cannabis markets under-performing?

Adjusted for population, retail cannabis sales in Illinois and Michigan – the only adult-use markets in the Midwest – have slightly underperformed in the first nine months since launch.

Though both states continue to post large monthly sales figures, limited access to retail stores has prevented Illinois and Michigan from reaching higher per capita spending marks set by other adult-use markets in the U.S.

While the long-term outlook for cannabis sales in both states remains bullish, the slow rollouts provide a lifeline to illicit operators and strengthens first-mover advantages gained by a small number of early market entrants. 

At $34 in per capita legal cannabis spending, Illinois was off 12% from the average of $39 in per capita adult-use sales by month nine in Colorado, California, Massachusetts and Oregon. At $28, Michigan was down nearly 30% from this combined month nine per capita spending average. 

$39 in per capita sales by month nine translates to $496 million in total sales in Illinois and $389 million in Michigan. Actual sales totals through month nine were $432 million and $282 million in Illinois and Michigan, respectively. 

In both states, local bans and moratoriums – as well as issues around social equity in the licensing process – has suppressed access to retail stores and kept sales from reaching their full potential. 

Currently, no adult-use retailers have been licensed in Detroit – the largest city in Michigan – as lawmakers grapple with ways to award licenses in a fair and equitable manner. 

In Illinois, all adult-use retail stores are operated by existing MMJ dispensaries. Though the state was set to award 75 new retail licenses earlier this year, that has been delayed indefinitely as regulators work to address allegations of corruption and unfairness in the licensing process – one that was touted by state officials as the most equity-centric in the country. 

As of September 30th, 67 adult-use cannabis stores are licensed in Illinois and 179 in Michigan. By comparison, the city of Denver currently has 185 licensed adult-use cannabis stores.

That’s left many would-be customers in Illinois and Michigan with long drive times to the nearest adult-use retailer.  

For example, the closest adult-use dispensary for residents of Charleston, Illinois – a town of about 20,000 people and home to Eastern Illinois University – is 40 miles away.

The prospect of making a long drive only to be met with long lines and high prices discourages many regular consumers from leaving the illicit market and hinders the potential for new consumers to try cannabis through legal channels.  

Access will improve, however, as each market matures and additional license are awarded. But as more states consider adult-use legalization in the context of equity, fairness and inclusion, the sluggish roll outs in Illinois and Michigan may become the new normal rather than an exception to the rule. 

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