Mar 7, 2024 - Business

Illinois' recreational weed market is most expensive in the Midwest

Photo of a marijuana plant

Marijuana plants grow under lights at Cresco Labs medical marijuana cultivation facility in Joliet. Photo: Erin Hooley/Chicago Tribune/Tribune News Service via Getty Images

Illinois hit record sales for recreational marijuana last year, showing that the high cost to buy it here — among the priciest in the U.S. — has not deterred buyers.

Why it matters: Tax revenue from recreational marijuana goes to several state departments, including programs for criminal justice prevention, substance abuse and public health.

By the numbers: Illinois reached $1.6 billion in sales last year, while selling over 42 million products at dispensaries. That amounted to over $400 million in tax revenue for recreational marijuana.

  • The state also reported that pot sales to Illinois residents hit a record high, at more than $1.2 billion, which is up 15% from the previous year.

The big picture: According to the Marijuana Policy Institute, Illinois' legal cannabis tax is among the highest rates in the U.S., with up to 40% over the sale price.

  • We're behind several states, including Washington, New York, Nevada and California.

Zoom in: Due in part to those state taxes, Illinois is the most expensive legal recreational marijuana market in the Midwest, and it ranks close to the top nationwide, per an Axios analysis of Priceofweed.com crowdsourced data.

  • Alaska tops the list of states where recreational use has been legalized, with an average price of an ounce of marijuana costing more than $303.
Data: PriceofWeed.com; Note: Data: Priceofweed.com submissions; Note: Average reported price for medium-grade recreational marijuana, purchased either legally or illegally; Chart: Axios Visuals
Data: PriceofWeed.com; Note: Data: Priceofweed.com submissions; Note: Average reported price for medium-grade recreational marijuana, purchased either legally or illegally; Chart: Axios Visuals

The fine print: It's hard to compare recreational cannabis prices directly across the country, because most states have different brands and styles sold in their dispensaries.

  • Axios has chosen to compare state prices by "medium-grade" marijuana, which is the most prevalent marijuana sold in the U.S. for both potency and price.

State play: Illinois' recreational marijuana sales and tax revenue have grown steadily since going online in 2019.

Yes, but: Illinois is in danger of losing revenue to states like Michigan, which on average charges almost $65 less for an ounce of high-quality marijuana.

  • In Illinois, an ounce of high-quality weed costs over $25 more than the U.S. average.
  • Also, more Midwestern states are discussing legalizing marijuana, which could eat into Illinois' market share.

What we're watching: Colorado. The state, which was the first to legalize marijuana, has seen sales and tax revenue dip in the last two years, worrying state officials that the gold rush days are over, according to Axios Denver.

  • Washington, California, Nevada and Oregon have seen similar declines, too.

What they're saying: Beyond taxes, inventory and availability also play a role in the higher prices, experts say.

  • "It's supply and demand," Brad Spirrison, publisher of cannabis industry outlet Grown In, tells Axios. "We have limited dispensaries and cultivators in Illinois due to early licensing issues, so the dispensaries can charge a higher price."
  • "When there is more competition, the price will drop."

Between the lines: Despite sales revenue being on the rise in Illinois, industry leaders are worried that strict regulations are crippling growers and sellers, forcing them to file for bankruptcy or leave the business entirely.

What's next: Springfield lawmakers have signaled they will consider changing the state's marijuana laws, including loosening regulations for craft growers and dispensaries.

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