A few months ago I sat down with an investor from Illinois. The man and his investment firm were in the process of trying to obtain one or more medical marijuana cultivation licenses in Illinois. The man was touting just how lucrative each license would be because of how large a state Illinois is as measured by population, and how few cultivation licenses will be issued. While I acknowledged that the limited number of cultivation licenses is significant in that regard, I told him at the time that the limited patient base would be an issue. I don’t think he seemed to understand what I was saying.
We agreed to disagree, and I took my laptop and went home. It wasn’t a big deal to me because I don’t live in Illinois, and more importantly, I’m not trying to get in on the Illinois medical marijuana industry. Unfortunately for the investor, his firm did not win a cultivation license. It sounds like his firm may get another shot though, as many companies that won licenses are scrambling for investment money. Per Marijuana Business Daily:
A lawsuit has been filed claiming that Cresco Labs, a license winner, lacks enough financing to get a state permit to grow MMJ. The Sun-Times said a subcontractor for Cresco is seeking $29 million in addition to the $7 million it already has to develop the company’s farming operations.
In Grown Farms LLC 2, another license winner, is seeking $13.5 million, the newspaper reported, citing an internal document.
Green Thumb Industries gave up the license it was awarded, saying it didn’t want to pay a $200,000 licensing fee due to the low initial patient counts. The company also would’ve needed $2 million in an escrow account to accept the permit.
Currently there are only 1,600 medical marijuana patients in Illinois. Due to such a restrictive list of qualifying conditions in Illinois, I don’t see that number expanding exponentially anytime soon. I think that a lot of people clamoring to get into Illinois’ medical marijuana industry on the grower side are going to be in for a rude awakening, and it sounds like that is already occurring for some companies. To put into perspective just how small Illinois’ medical marijuana consumer base is right now, consider that Illinois only has 1,600 patients for a state with a population of 12.88 million people. Compare that to my home state, Oregon, which has almost 70,000 patients despite only have a population of 3.97 million people. Yes, Oregon’s program is much older, but I think the comparison puts into perspective just how limited the business opportunities are going to be in Illinois until the state expands the list of qualifying conditions to become a medical marijuana patient.