Illinois Launches Adult-Use Cannabis Sales After Governor Pardons Thousands of Cannabis Convictions: Week in Review
At 8 p.m. on Dec. 31, when New Year’s Eve celebrations were just ramping up, eager consumers began lining up outside of Cresco Labs’ Sunnyside* dispensaries for their 6 a.m. open the next day.
Hours later, after Illinois’ first adult-use cannabis sales commenced on Jan. 1, Cresco co-founder and CEO Charlie Bachtell, without identifying himself, asked one of his customers how long the wait was. The man, visibly tired, told Bachtell that he was in line for seven and a half hours. Bachtell then asked him if it was worth it. “He smiles,” Bachtell recalls. “He goes, ‘Worth every second.’”
Nearly $3.2 million in sales and more than 77,000 transactions marked the historic first day of adult-use cannabis sales in Illinois, according to the Illinois Department of Financial and Professional Regulation (IDFPR). More than 40 dispensaries sold adult-use product on Jan. 1, according to ABC 7 Chicago. With demand still high, customers and employees continue celebrate and remain mostly cordial, while questions about supply and taxes creep up and conversations continue about equal minority representation in the space.
Bachtell estimates more than 500 people consistently waited in line at Cresco’s five dispensaries, many of them for five to seven hours. The company provided waiting customers with coffee, water, pizza, lighters, hats and bags, while making space for the queues in nearby businesses it had rented for the day.
Cresco’s stores—in Chicago, Champaign, Rockford, Buffalo Grove and Elmwood Park—sold over 9,000 products to more than 3,000 people on New Year’s Day, according to a press release from the company. Cresco’s average receipt for the day was $135.
“We did implement sort of a rationing system where we limited people to buying one product from each kind of category at a time, so one flower product, one vape pen, one edible, one concentrate,” Bachtell says.
Customers seemed mostly content with purchasing limited supplies so that others could relish in the end of state prohibition, Bachtell says. At the same time, he says, “I think the demand far exceeded what we were actually able to sell, just based on the processing of an order time and our restriction on how much each person was allowed to buy.”
That’s coming from a vertically integrated multistate company that Bachtell says just expanded its canopy space in Illinois alone to about 180,000 square feet. Cultivation and processing allow Cresco a 25% market share of the cannabis product sold in Illinois.
“In terms of categories, flower was the first to go — the buds — then the shake, then the pre-rolls. Now people are really digging into our edibles and our vape cartridges, and also, our concentrates are selling pretty well as well.”
– NuMed Director of Marketing Jonah Rapino
Meanwhile, NuMed, an Illinois retailer with three locations, does not cultivate or process cannabis, so it relies on supply from its cultivator partners. The dispensary’s Chicago storefront limited flower sales to one eighth per person on Jan. 1. Then, that store ran out of flower around 4 p.m., says Jonah Rapino, director of marketing.
At NuMed’s two other locations in Urbana and East Peoria, flower hasn’t yet been made available for adult-use consumers, he says. NuMed prioritizes its medical patients and provides them with a separate, guaranteed 30-day rolling supply of product. And, like Cresco, it has a separate, orders-of-magnitude-shorter line for medical patients.
“I have no idea when we’re going to be getting another shipment in, because once again, we’re just beholden to the cultivators,” Rapino says of flower for adult-use sales, shortly after 2 p.m. CST on Jan. 2. “We’re just waiting for them to post what they have that we can purchase.”
NuMed hasn’t limited sales of other product types beyond the state limits, and it hasn’t yet run out of supplies of those products.
Rapino lists the best-sellers so far: “In terms of categories, flower was the first to go—the buds—then the shake, then the pre-rolls. Now people are really digging into our edibles and our vape cartridges, and also, our concentrates are selling pretty well as well.”
To manage long lines, NuMed has been entering its customers into a digital system that allows them to leave the premises and spend a few hours at their relative leisure.
“They’re going out to local restaurants or waiting in our nice, warm across-the-street waiting area, and then they’ll get a text notifying, ‘Hey, it’s your turn; come on in,’ and they’re coming in,” Rapino says.
On the evening of Jan. 1, NuMed had to turn away people who showed up to get in a line that already had hundreds of people waiting and would already take until close to service.
Despite employees’ requests, many people in the line stayed. “They still were just there in line, until finally at like 6:45 [p.m.] we were like, ‘Look, guys, really, there’s no way you’re going to get in. Thank you so much. Try again early tomorrow,’” Rapino says. The business added many of the them to its text list and saw them the next day.
About 1,700 customers made purchases at NuMed’s three stores on day one, and hundreds more had filed in by mid-afternoon the next day. Rapino says he expects hundreds of people to continue to show up every day, until there’s nothing left for them to buy.
Concerns about the program
In addition to issues with supply, some people are voicing concerns about high taxes—between 10 and 25% per product, depending on the THC level. Rapino calls them “astronomical” and predicts that they will drive people to the medical program, which doesn’t have them, and the illegal market.
Anthony Beale, alderman of Chicago’s 9th Ward and member of City Council’s 20-member Black Caucus, shares the concern that high taxes could drive customers to the illegal market. People will still buy and sell cannabis illegally in Illinois, or they will drive to Indiana to buy it and bring it back.
Aside from lowering taxes, Beale says an essential way the cannabis adult-use cannabis market in Illinois needs to improve is through equal representation between minority and white business owners. To this point, the Black Caucus drafted an ordinance that would delay sales until July 1, 2020, by which point black, Latino and other business owners could join the industry. The ordinance failed in a Dec. 18 vote, which Beale says disappointed him in part because six Black Caucus members voted against it.
Alleged assurances from Gov. J.B. Pritzker’s office that medical dispensary licenses would be awarded to social equity applicants may have influenced some of those votes but turned out to be rumors, Beale says. (Cannabis Dispensary contacted the governor’s office for comment but has not yet received a response.)
Someone, possibly within the Black Caucus, “misrepresented themselves and the governor’s office,” Beale says. “In fact, there were no assurances, so I just don’t get how can anybody with good conscience can sleep at night knowing that they voted against their community,” he says.
“This is redlining all over again. Grocery stores don’t want to go into a certain community. Now, we have marijuana dispensaries that don’t want to go in a certain community. So, it’s business as usual.”
– Chicago 9th Ward Alderman Anthony Beale
Now that adult-use cannabis is legal, Beale says existing dispensaries have a competitive advantage over social equity applicants that have yet to be awarded licenses and come online. With new dispensary organization licenses limited to 75 between May 1 and Dec. 21, 2021, according to the Cannabis Regulation and Tax Act, Beale says there’s no guarantee that any number of them will be minority owned.
“I just think that this was a huge, huge blow and a slap in the face to the African-American community—and the Latino community, for that matter—that there’s no minority participation when everybody complains about [how] the jails are full of minorities, the high crime is in minority communities, the worst school systems are in the minority community,” he says. “This was an avenue to right the wrongs that have devastated our community because of the War on Drugs.”
What’s more, Beale points to how most of the existing dispensaries in Chicago are downtown and on its north side, which have less minorities than its south and west sides. And the lottery in the city followed the same pattern as many dispensaries claimed spots downtown and in the north.
“This is redlining all over again,” he says. “Grocery stores don’t want to go into a certain community. Now, we have marijuana dispensaries that don’t want to go in a certain community. So, it’s business as usual.”
Al Harrington, Viola Brands co-founder and former NBA player, says he plans to bring his vertically integrated multistate company to Illinois, including Chicago.
“We’re going to apply for some of those retail locations, and then when they open up those micro business licenses, we’ll probably go after some cultivation as well so that we can stock the shelves of our stores,” he says.
Harrington’s team includes co-founder Dan Pettigrew, who the Chicago Sun-Times reports is from the city’s South Side and is applying for social equity points based on his residency in the city’s Hyde Park neighborhood. Illinois has deemed at least parts of the community to have been disproportionately impacted by prohibition.
When Cannabis Dispensary caught up with Harrington a week before the Dec. 18 City Council vote on the delay ordinance, he said he supported the Black Caucus’ and others’ pushes for a revision of social equity requirements in Illinois.
“The one thing I can say about the people of Illinois is that they—especially people like the Black Caucus and some organizations within the state—understand that that is a problem, and they are doing everything they can to try to fix that and make it right,” Harrington says.
At the same time, other industry members such as Bachtell applaud social equity language in the state’s bill, which outlines that medical dispensaries transitioning to adult-use sales must follow a “Social Equity Inclusion Plan.” Cresco’s Social Equity & Educational Development (SEED) incubator program meets this requirement, the company’s Chief Communications Officer Jason Erkes previously told Cannabis Dispensary.
The fact that many Illinois adult-use customers are leaving dispensaries with smiles, and some with plans to frame their receipts, exemplifies the value of the newly launched program, Bachtell says.
“That’s the kind of energy and excitement there is around adult-use in Illinois, and I think a lot of that has to do with the structure of the program, the social equity and restorative justice components of it, the operators that are here,” he says. “I think the legislators did a really good job of putting together a really good, solid version of what I think Gen 2 of an adult-use law can look like in the U.S.”
Published at Sat, 04 Jan 2020 12:00:00 +0000