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Illinois becomes the 11th state to legalize recreational marijuana - now what?

With attempts to legalize marijuana stalled in both New York and New Jersey, Illinois has moved to the head of the line to become the 11th state in the U.S. to legalize the recreational use of marijuana by adults age 21 and over, and only the second state to do so via an act of the legislature after Vermont broke the ice last year.

Recreational sales are scheduled to commence on January 1, 2020.

So what’s next for the state’s industry? What happens to the state’s burgeoning medical marijuana program? And just how big is the combined Illinois marijuana market expected to get?

Dispensaries and growers gear up for recreational sales

With recreational sales beginning in less than 6 months, existing medical marijuana growers and dispensaries are gearing up to meet the expected explosion in demand.

Before the bill was signed, the state counted 55 medical marijuana dispensaries. Those operations are being offered the opportunity to sell recreational marijuana and also to open a second location resulting in more than 100 dispensaries selling marijuana when recreational sales launch at the beginning of 2020. That number will eventually be raised to 200.

[Lawmakers in New York and New Jersey regroup after recreational legalization efforts unravel]

Growers will need to greatly expand their canopy space to meet demand, and dispensaries have already begun renovating their shops and streamlining their operations to accommodate a surge in medical customers.

Existing players in the state’s medical market such as Cresco Labs, Green Thumb Industries, Verano Holdings, and MedMen, are all planning to apply for early-approval licenses. (The cost for a recreational grower’s permit will be between $450,000 to $950,000, and for dispensaries, $260,000, and allow license holders to operate until March 2021.)

“Of course, we’re looking down the road at what it could be. So, this facility here in Joliet, you know, we’ve built out to our full capacity and we’re expanding other facilities around the state to be able to accommodate both the future patient growth and an adult-use program here in this state. We want to be ready for when and if that happens, to be able to accommodate, you know, the patients, the consumers, and anybody that’s interested in buying cannabis products.” — Cresco spokesman Jason Erkes [source]

On the horizon: the hiring boom

The legalization of marijuana has resulted in a jobs boom, nationwide. In fact, the cannabis industry boasts the fastest growing job market in the U.S. Experts expect the situation to be no different in Illinois. Along with cannabis operations gearing up for the expansion of medical sales and the coming launch of recreational sales, will come an expected boom in jobs.

The coming cannabis job market in Illinois is expected to be at least four times the size of the initial boom resulting from the launch of medical sales. With a quadrupling of dispensaries comes a corresponding quadrupling—give or take—of jobs. Cresco Labs has hinted that it will at least double its current roster from about 300 today to about 600 come 2020.

[Iowa governor vetoes medical marijuana expansion bill]

Unionization is also a big part of the new rules. Under the new legislation, part of the selection criteria for new applicants will be “labor-peace agreements.” According to Rep. Emanuel Welch, the intent of these agreements is “to have good, well-paying union jobs in this industry.” Both Cresco and MedMen expect their employees to unionize.

One of the challenges the industry will face in expanding their rosters will be the required background checks. All cannabis workers are required to undergo both state and federal background checks, and these can take time.

What happens to the Illinois medical marijuana market?

Where does this leave the state’s medical marijuana program?

The new measures do not replace Illinois’ medical marijuana market. In fact, the freshly signed recreational marijuana bill is written in such a way as to ensure that patients enrolled in the medical program take priority over recreational customers. Dispensaries will be required to maintain stocks sufficient to meet the needs of their medical customers before they can begin selling additional product to recreational customers.

Recent rule changes in the program—such as the removal of background checks and the expansion of qualifying medical conditions—have created an influx of new patients. More than 12,500 new patients have enrolled in the program since February. Additional expansions are being considered as well.

Almost 67,000 patients are currently enrolled in the program. That number is expected to rise to somewhere between 128,000 to 256,000 people.

Total medical marijuana sales recently passed the $300 million mark.

“Why would we keep a medical program, if there’s a recreational source around and you could skip seeing the doctor and just go get it yourself? It’s that you’ll miss out on the monitoring with one’s other medications, for instance. We would want to be sure we’re monitoring for abuse, toxicity. And you wouldn’t have those checks in place if one were just using it without kind of any medical supervision if you’re using it for medical purposes.” — Dr. Leslie Mendoza Temple, Former Chairperson of Illinois Medical Marijuana Advisory Board [source]

How big will marijuana get in Illinois?

The news that Illinois is going recreational is no small thing. In fact, Illinois is expected to produce one of the largest marijuana markets in the country.

The U.S. cannabis market has grown to become one of the fastest growing industries in our lifetime. According to Chicago-based cannabis research firm Brightfield Group, sales are projected to reach $22.7 billion by 2023 with more than two-thirds of that amount coming from recreational sales.

[Arizona Supreme Court ruling ends a five-year argument over medical marijuana extracts]

While California is expected to remain the largest marijuana market in the nation, Midwestern states such as Illinois and Michigan are expected to be on par with Western states such as Colorado and Nevada.

Experts such as Charlie Bachtell, CEO of Chicago-based, multi-state operation Cresco Labs, estimates the Illinois recreational market will grow to somewhere between four to eight times the size of the medical marijuana market pretty much right out of the gate. Eventually, the recreational market could reach 10 to 20 times the size of the medical market.

  • Existing medical-use sales: about $130 million annually

  • Estimates of recreational-use sales: $1.6 billion annually

(Photo courtesy of Thought Catalog via Unsplash)
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