The medical and adult-use market of Illinois has a strict regulatory environment with a heavy focus on social equity in awarding licenses. Only 30 mega cultivation licenses (210,000 sq. ft. allowable canopy) are permitted in the state, which also allows processing, and no single operator can own more than ten retail licenses. The 21 licenses that are currently operating were all medical-use cultivation centers that were approved to convert to adult-use following the passage of the Cannabis Regulation and Tax Act.

In addition to the adult-use cultivation licenses, Illinois has a limit of 150 Craft Grower licenses (5,000 sq. ft. - 14,000 sq. ft. allowable canopy). These licenses are primarily issued to social equity applicants ("SEAs").

As for dispensaries, the Cannabis Regulation and Tax Act caps the number of Adult Use Dispensing Organization licenses at 500. There are currently 241 issued licenses and this number continues to grow. There were 63 licenses issued each year in 2023 and 2024.

January 2025 | Rubino Ventures IL announces acquisition of two dispensaries from Body and Mind Inc. for $5MM

November 2024 | Nature's Grace and Wellness acquired three dispensaries from OKAY Cannabis

April 2024 | MariMed acquired Allgreens Dispensary for $3.3M

September 2023 | nuEra Cannabis announced its acquisition of ieso

November 2021 | Ayr Wellness entered an agreement to acquire Gentle Ventures, LLC (Dispensary 33) in Chicago

July 2021 | Ayr Wellness announced its acquisition of Herbal Remedies Dispensaries for $30MM

March 2021 | Parallel announced its acquisition of Windy City Cannabis up to $155MM

February 2021 | Verano Holdings LLC went public on the Canadian Securities Exchange

August 2020 | Ascend Wellness acquired Moca Modern Cannabis and Midway Dispensary

February 2020 | Jushi acquired two dispensaries in Illinois

The market has seen explosive growth since adult-use sales began in January 2020. Illinois monthly cannabis sales have risen from $28MM in December 2019, the month before adult-use sales began, to $172MM in November 2024. The state is expected to generate roughly $2 billion dollars in retail sales across medical and adult-use markets for 2024.

With only 21 mega cultivation licenses and no outdoor grow of consequence, the Illinois wholesale market continues to be one of the best in the country for large scale operators. However, we are beginning to see more stabilized revenue growth numbers. As revenue growth slows and the state continues to issue more retail licenses, smaller retailers are finding themselves in a more competitive environment.

Most of the MSOs already have substantial vertical operations in the state. Mid-tier MSOs and those that aspire to be, would be wise to find their way into the Prairie State in a substantial way.

In an absolute boon to SEA lottery winners, Pritzker is allowing the licenses to trade freely, and we are beginning to witness transaction activity at a frenetic pace. SEAs are raising financing, considering selling out, and in some cases forming alliances to create the retail scale required to ensure adequate sources of future supply. Inside this activity, opportunity abounds for well-capitalized players with the foresight to enter this burgeoning market.

All we can say at this point is, buckle up and stay tuned.