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Will Illinois’ Cannabusiness Find Its Mojo?

It's been a slow start (to put it mildly). By Derrick Lilly | Fall 2016

MJ

Illinois’ four-year Compassionate Use of Medical Cannabis Pilot Program Act was signed into law by former Governor Pat Quinn back in 2013, but the state’s first medical marijuana (MMJ) sales didn’t sprout until November 2015.

Further hampering Illinois’ new cannabusinesses is the patient population’s slow growth, no thanks to various levels of red tape and physician and community apprehension to support the use of MMJ. As recently as last December there were only 4,000 qualified patients and 23 fully licensed dispensaries across the state. While according to the Associated Press those numbers have climbed as of June of this year to 7,600 qualified MMJ patients and 39 registered dispensaries, the sustainability of the state’s newest industry remains questionable.

As it stands, the current number of patients can’t possibly support the profitability of the full number of dispensaries (60) and cultivators (21) that eventually could be legally licensed to operate in Illinois (the state estimated having 75,000 to 100,000 qualified patients by the end of the program’s first year). In fact, some close to the industry speculate that some of those licenses may be surrendered or passed on if the original license winners can’t manage to get up and running.

“It’s a huge, huge problem,” Michael Mayes, CEO of Chicago-based MMJ consultancy Quantum 9, told Marijuana Business Daily in a June interview. “With the lack of patients into the registry, businesses will suffer greatly…and may even go out of business due to the lack of a market.”

Since inception, retail MMJ sales have totaled only $13.8M, including the latest monthly sales record of $2.57M in June, up from May’s $2.3M, according to statistics issued by the Illinois Department of Agriculture. While the steady growth of retail sales bodes well for the budding industry, the real kicker is that the total number of patients able to access MMJ is currently a far cry from the numbers these businesses were expecting after clamoring to get licensed and open for business. Most MMJ business owners report needing a market of at least 20,000 to 30,000 patients to stabilize the industry as it tries to mature.

So what’s going to save Illinois’ medical marijuana industry from going up in smoke?
For starters, our state legislators and Governor Rauner. At the end of June, Rauner signed into law a previously vetoed extension of the state’s MMJ program. While the program originally would have expired at the end of 2017, likely serving only a fraction of the patients originally intended, the pilot program will now run through 2020.

But that’s not all. The new law breathes new life into the program by adding two qualifying conditions for MMJ treatment: Post-Traumatic Stress Disorder (PTSD) and terminal illness.

Combined with the tens of thousands of patients still making their way through the slow-going initial application process, those suffering from these added conditions could spur a surge in MMJ patients. PTSD alone could bring in thousands of new patients, considering that an estimated 8 percent of adults suffer from the psychiatric disorder, which stems from experiencing traumatic and life-threatening events such as military combat, violent crime and sexual assault. The Illinois Department of Public Health reportedly is already preparing new rules and application forms to reflect the inclusion of these conditions.

The new law also clears away language that discouraged doctors from providing access to MMJ. As it stands, doctors don’t actually prescribe MMJ, set dosages or offer their opinion on use; rather, they certify that a patient suffers from one or more of the qualifying conditions. Still, physicians may be one of the biggest barriers to MMJ access.

As Molly Parker of The Southern Illinoisan reports, “While supporters of the state’s medical marijuana pilot program cheered the extension and changes signed into law on June 30, Southern Illinois patients still face more hurdles…because the region’s major health systems—Southern Illinois Healthcare, Heartland Regional Medical Center and the Southern Illinois University School of Medicine—as well as some other smaller providers, have directed the physicians they employ not to participate.”

Literally thousands of potentially eligible MMJ patients are being denied access over healthcare provider and physician legal concerns that the latest law in fact aimed to alleviate. Many in the industry are banking on public outreach and educational campaigns for both patients and physicians that explain the medical benefits of cannabis in order to help bolster participation.

For now, Marijuana Business Daily estimates that Illinois is set to see $25M to $35M in MMJ sales this year, if the trend of roughly 20-percent month-over-month sales increases continues, and the state keeps on expanding MMJ access to patients.

While the numbers aren’t yet enough to ease the fears of MMJ business owners, it’s a move in the right direction—and it goes to show that despite the naysayers, MMJ is becoming a viable cash business in Illinois.