CHICAGO — When marijuana shops open their doors to the public in January, shoppers at the back of the line might notice something missing once they get inside: the weed.
Nearly every state that allows recreational marijuana had some shops run out or run low in the first days of sales. In Colorado, some customers were greeted with signs telling them to check back the next day. In Nevada, higher-than-expected sales in the first week left shelves near empty.
“I’m fully anticipating there’s going to be product shortages in the early days,” said Kris Krane, president and co-founder of 4Front Ventures, which owns a growing facility in Elk Grove Village and Mission South Shore dispensary in the South Chicago neighborhood. “There just isn’t going to be that much product available on Jan. 1.”
Like elsewhere, interest and demand for weed is expected to be strong, but factors specific to Illinois also could lead to shortages. Many of the state’s 21 growing facilities are expanding capacity, but construction takes time. Furthermore, the state so far has licensed only seven of them to grow recreational weed, and it takes a cannabis crop about three months to grow.
Additionally, the number of patients in the state’s medical marijuana program roughly doubled in the past year, and continues to grow. Those patients will be shopping at the same stores as recreational customers.
Illinois law requires dispensaries to make sure they have enough cannabis for medical patients. That means if supplies run low, retail locations might start limiting how much recreational customers can buy, require appointments or sell only to medical patients.
Dispensaries that run out of products for patients once recreational sales start could face up to $10,000 fines. Mark de Souza, CEO of Revolution Enterprises, which owns a growing facility and a retail location in Illinois, said some stores already see shortages of certain products.
“When you’re out of it, you put up a sign that says 'Recreational inventory sold out,’ but it’s a tough row to hoe,” he said. “I really hope the industry puts their patients first.”
Any demand-supply imbalance also could be helped by the addition of growers. Applications for smaller, “craft” growers open next year, and additional large-scale cultivation licenses won’t be awarded until 2021, if demand allows it.
Chicago-based PharmaCann is more than doubling production at its Dwight facility, but the increased capacity won’t start hitting store shelves until mid-2020, said Jeremy Unruh, director of public and regulatory affairs.
“It’s going to be a bumpy first six months or so,” he said “Six months from the passage of the bill to the first sale is very, very quick.”
Eventually, nearly 946,000 Illinois residents — more than 9% of people over age 21 — could become cannabis consumers, according to a study commissioned by Illinois lawmakers and conducted by consulting firm Freedman and Koski earlier this year. Out of the roughly 114 million visitors to Illinois each year, almost 11 million are expected to buy weed.
In comparison, less than 51,000 medical patients bought weed at dispensaries in September.
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In Colorado, it took several years for demand to build and for growers to be able to fully supply it. But the first days of legal marijuana sales carry with them an excitement that draws people to wait in line, even on a cold January day.
“On the opening day and weeks, there’s a novelty to it and a kind of celebration to it that spikes a sell-off not unlike the new Apple phone coming out,” said Andrew Freedman, co-founder and partner at the San Francisco-based consulting firm.
Jason Erkes, spokesman for Chicago-based Cresco Labs, said he expects cannabis supplies to level off after the initial buying frenzy calms down. Cresco has three growing facilities in the state, all of which have been or are being expanded. It also owns five retail locations and is looking to open five more.
“It’s important to remember that Jan. 1 is the first day that cannabis can be sold, but nobody ever thought that every business would be up and running the first day,” he said.
Many local municipalities still have to decide if they’ll allow recreational sales, and the industry is at odds with the state on whether they should be allowed to relocate existing shops and still sell recreational cannabis from those storefronts. And if municipalities ban recreational shops, it puts more pressure on stores nearby.
A lack of places to buy recreational marijuana in January will likely contribute to the supply issue, Freeman said. That happened in Colorado, too.
"You’re going to just see really high prices when compared to medical and the illicit market prices at the beginning,” he said. “There’s a spike in demand, there’s a lower supply in the regulated (market), so the price goes up. That happens everywhere.”
Having a highly regulated medical cannabis program will likely help smooth the roll out of recreational sales, Freedman said. He also said it’s better to have products sell out in the early days than to have too much weed, like the situation that unfolded in Oregon.
An overabundance of licenses to grow resulted in so much marijuana in Oregon, many worry it could end up being sold on the black market or smuggled across state lines. Krane from 4Front Ventures said the best thing to do is give the system time to work, and not over-correct by handing out more licenses.
“Recognize what’s coming," he said. “Don’t panic when it happens, because it’s simply a product of this transition period."