Marijuana no longer is a ... ‘DIRTY LITTLE SECRET’
At the beginning of the coronavirus pandemic, 33-yearold Katie Johnston-Smith was feeling “a good, healthy amount of panic.”
She tried wine but it didn’t help. She took a marijuana-infused edible, and a calmness washed over her and sleep came easier.
“It was pretty nice, because it did help me mellow out,” she said. “I was like, ‘Oh, this is way better than mellowing out with a glass of wine.‘”
The Roscoe Village neighborhood resident went from using marijuana a couple of times a month before the pandemic to a couple of times a week.
Experts say she is not alone.
The pandemic has sent people searching for ways to cope with the anxiety of a global health crisis and economic downturn. Marijuana — which only became
widely legal in Illinois Jan. 1 — has emerged as the coping mechanism of choice for many. Stores selling it were deemed essential businesses by the state, new dispensaries have opened and product introductions continue. People are taking the money they would have spent on restaurant meals and nights out and using it to buy weed.
Roll all that together and it totals recreational weed sales of more than $300 million so far in 2020, including $61 million in July, the most of any month since sales started. Experts say those numbers exceeded expectations, and weed business owners are pleasantly surprised. The state also collected $66.8 million in tax revenues from the first seven months of sales — a bright spot as the pandemic continues to scar the state’s finances.
The industry’s outlook is not entirely rosy, though, and some stumbling blocks could constrain its future.
Though there are more products on dispensary shelves now than in January, supplies are not unlimited. Additionally, the pandemic delayed both the opening of new marijuana stores and awarding the next rounds of state-issued licenses to open a weed business. There are 56 dispensaries selling recreational weed, up from 37 on Jan. 1, but more were expected to be open by now.
Long-time marijuana fans may be shifting from the black market to the state’s licensed dispensaries. Experts say legal shops are perceived as a safer place to make purchases, both because they follow social distancing standards and are highly regulated.
Boulder, Colorado-based BDS Analytics estimates $2 billion will be spent on the state’s illicit market this year, down from $2.26 billion last year.
How much customers spend at dispensaries is on the rise. In Illinois, the average transaction increased to $150 in the three months ended in June, compared with $126 in the previous three months, according to Washington, D.C.-based New Frontier Data. That’s on par with a 22% increase nationally.
There’s no way to know how much of that bump came directly from the pandemic, since this is Illinois’ first year of sales. But other states with more mature marijuana markets also are seeing sales climb.
In the second quarter, total marijuana sales in Colorado were up 17% over the same period last year, according to data from the Colorado Department of Revenue.
Cannabis consumers are home more, and that encourages more frequent use, said Bethany Gomez, managing director of cannabis research firm Brightfield Group.
“Even prior to the pandemic, what we found was alcohol was a lot more for celebratory purposes,” she said. “But cannabis was your dirty little secret, or something that you would use at home by yourself to relax at the end of the day.”
“It’s something that encourages you to stay home and on your couch and relaxing.”
In a survey of 3,500 cannabis consumers, 27% said they used only marijuana when relaxing at home, and 55% said they used alcohol and marijuana, according to Brightfield Group. Just 11% of respondents said they only drank alcohol while at home.
Johnston-Smith and her husband fit that trend. They’ve taken money they might have spent on social activities and alcohol and used it to buy marijuana.
“We’re definitely shifting away from drinking,” said Logan Dean, JohnstonSmith’s husband. “It’s Chicago, so we’re a hard-drinking town, but we’re definitely kind of exploring that (legal marijuana) a little bit more now that we have access to it.”
Gov. J.B. Pritzker designated dispensaries essential in March, and operators had to scramble to come up with ways to encourage safe, socially distanced sales — no small feat considering the long lines outside stores in the first months of legalization.
As larger dispensaries open, that becomes easier. Cresco Labs had a grand opening Thursday for its biggest Illinois dispensary. Markers on the floor indicate a safe distance from the next person in line. The shop, Sunnyside, is located next to Woodfield Mall in Schaumburg.
The online ordering systems that many dispensaries launched to keep the lines down may also have helped sales.
“We got a lot better at being able to get people in and out because of the online order reservations,” said Jonah Rapino, spokesman for NuEra, which has dispensaries in Chicago, East Peoria and Urbana and recently changed its name from NuMed.
Some customers say the ease and efficiency of online ordering is appealing.
“You just put in an order, and you go pick it up, and it’s that easy,” said Kevin Pelletier, a Lisle resident who shops at the Sunnyside dispensary in Elmwood Park.
The 35-year-old didn’t start going to dispensaries until after the pandemic started. He wasn’t interested in waiting in the long lines, outside in the cold. Now he’s a regular customer.
But with the shift to online sales, it’s been difficult for dispensaries to maintain the type of inperson education offered by store employees, and that could hinder customer growth.
Recommendations from workers are one of the top drivers of purchasing decisions in a dispensary, said Brightfield Group’s Gomez. Without those suggestions, consumers who don’t know much about marijuana and older customers — who might have smoked when they were young but are overwhelmed by today’s the product choices — might be deterred.
Additionally, it’s still illegal to get marijuana delivered in Illinois, and people are relying more on delivery for all kinds of goods during the coronavirus outbreak.
Dispensaries also are losing out on walk-in traffic that might have come from neighboring retailers and restaurants that are operating with limited hours.
Declines in business and leisure travel to Chicago also could thwart growth plans.
“We’re still doing good business, but nothing like we were seeing in January, February,” said Danny Marks, CEO and co-founder of MOCA Modern Cannabis, which has a dispensary in Logan Square and plans another in River North. “There’s no tourism, we’re not surrounded by open businesses creating tons of walk-in traffic.”
COVID-19 might be driving some demand, said Greg Butler, chief commercial officer at Chicago-based marijuana company Cresco Labs. But more likely, the record-breaking sales are the result of more product availability.
Supply issues plagued the early days of Illinois recreational marijuana sales. Dispensaries instituted buying limits for recreational customers, and flower — the dried marijuana buds users smoke — was nearly impossible to find.
Many stores have lifted the buying limits put in place in January. But experts don’t expect the supply issue to be resolved entirely until at least next year. There are 21 facilities in Illinois where weed can be grown, and it cannot be shipped across state lines. The state is months behind on awarding licenses to operate new cannabis businesses, including craft growers.
Many existing growers have expanded their facilities, and the products grown as a result started arriving on dispensary shelves this summer, Butler said. Cresco expanded its Kankakee and Lincoln cultivation facilities, and increased production at its Joliet facility.
“With supply picking up, it has allowed customers to purchase that extra product or two that might not have been available,” said Michael Mandera, general manager of the Herbal Care Center dispensary, north of the Pilsen neighborhood.
Sales are expected to continue rising. Brightfield Group estimates Illinois marijuana sales could be at almost $5 billion by 2025.
“This is a young market,” said Kagia from New Frontier Data. “It still has a long way to go.”
“It’s Chicago, so we’re a hard-drinking town, but we’re definitely kind of exploring that (legal marijuana) a little bit more now that we have access to it.”
—Logan Dean