CHICAGO — The cannabis industry in the United States has long been centered around such states as Colorado and Oregon, but now, marijuana sales in Illinois and its neighboring states east of the Mississippi River are poised to rival those out west.
The U.S. cannabis market is staring down massive growth, with sales that are expected to reach $22.7 billion by 2023, including $16.8 billion in recreational sales, according to a report out Tuesday from Chicago-based cannabis research firm Brightfield Group. Political support is growing around legalization efforts, and medical programs are expanding around the country.
In Illinois, lawmakers are working to capture some of those potential recreational sales. They hope to pass a bill by the end of May that would legalize recreational use of the still federally illegal drug by January.
Currently, the top five markets are west of the Mississippi, with Colorado, Oregon and Washington making up 42% of total U.S. sales, according to the Brightfield report. Sales in Illinois, Massachusetts, Michigan, New Jersey and New York together make up 11 percent.
By 2023, those market shares are expected to flip, Brightfield predicted, with the eastern states making up 34% of the market, and the western states dropping to 20 percent.
“A lot of it comes down to population density,” said Bethany Gomez, managing director of Brightfield Group. “There’s much more opportunity in these areas that have larger populations and the market size can be larger. … Illinois is going to be huge.”
California is expected to remain on top, with one-fifth of total demand. But Illinois and Michigan are expected to rival Colorado and Nevada.
States in the Midwest and along the East Coast are more populous than those out west, offering greater potential for long-term growth among cannabis companies, according to the report. Their marijuana programs have so far limited the number of licenses issued to operators. That has created a “fertile environment for scale and consolidation,” and added value for big-time investors, according to the report.
Though some argue that the caps on licenses have kept out smaller operators, they have also given rise to about a dozen large, well-capitalized cannabis companies that operate in several states. Chicago-based companies such as Green Thumb Industries, Grassroots, and Cresco Labs are among the highest valued companies in the industry, according to the report.
“As these big players establish themselves in the medical marijuana markets in the East, we can expect to see explosive growth from scale once these states become legal recreational markets,” according to the report.
Illinois’ medical program has also expanded, adding more than 12,500 patients since February, when the state dropped fingerprint and background check requirements for patients, allowed people prescribed opioids access to medical marijuana, and started granting provisional access while medical card applications are reviewed.
The report’s findings hinge on politics and other unforeseen factors. Lawmakers are already working to amend the Illinois bill, introduced earlier this month. Vermont remains the only state to legalize marijuana legislatively so far.