Illinois Will Need to Boost Marijuana Supply to Meet Demand if it Legalizes Recreational Marijuana, Study Finds

The report suggests that Illinois could become the second-largest state to legalize adult use marijuana, behind California.

A new study released Friday suggests that Illinois will need to up its current marijuana supply to adequately meet demand if it intends to legalize recreational marijuana.

The study, conducted by Colorado-based consulting firm Freedman and Kofsi, concluded that demand for adult use marijuana in Illinois would surpass that of the state’s current supply. Illinois would only be able to supply 35 percent to 54 percent of the 350,000 to 550,000 pounds of dried cannabis flower needed to meet demand every year.

The report was commissioned by state Rep. Kelly Cassidy and state Sen. Heather Stearns, two Chicago lawmakers who have pushed for legalization in recent years and are preparing to introduce a new legalization bill. The two had said they were waiting for this study’s findings before moving legislation forward. They hope to have the bill passed by May 31.

A fully-matured recreational market in Illinois could generate for the state an estimated $440 million to $676 million in annual tax revenue, according to the report. The revenue estimates were determined using other states with legal marijuana as baselines, and then factoring in usage and tourism rates specific to Illinois. If accurate, Illinois would become the second largest state to legalize recreational marijuana, behind California.

Still, the researchers acknowledge that their estimates only offer ballpark figures, and revenue would be impacted by language in the final legislation.

“Choices made by Illinois regulators will have significant effects on price and revenue, and until such choices are made, revenue estimates will be challenging to estimate,” reads the report.

Marijuana Shortage Illinois

Marijuana Moving Forward in Illinois

Illinois appears on track to become the next U.S. state to legalize recreational marijuana. Newly sworn-in Gov. J.B. Pritzker is committed to working toward marijuana legalization, and his proposed budget for the 2020 fiscal year includes $170 million in revenue from licensing fees and legal marijuana sales. About two-thirds of Illinois voters are in favor of such a move.

Illinois already has in place legal medical marijuana, with 16 licensed cannabis growers supplying the industry. The new report warns the state against granting many more.

“States like Oregon have faced the challenges of dramatic oversupply, encouraged by too many licensees producing far too much product for the market,” reads the report. “This has led to significant drops in prices that have caused challenges for businesses’ ability to operate and incentivized out-of-state diversion that has been documented as far away as the East Coast.”

Cassidy, however, believes more licensing opportunities will follow as the state’s legal marijuana market expands and grows.

“We’re contemplating additional license categories such as craft cultivation, transportation and processing to ensure that everyone is at the table,” said Cassidy. “These will create space for more innovation and entrepreneurship in the industry, but more importantly, provide opportunity for more diversity in an industry with a pressing need for it.”

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Illinois is one of five U.S. states we believe has a strong chance of legalizing marijuana this year.

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