Cannabis Retail Prices In Illinois Decrease 18% YoY, Cantor Fitzgerald Survey Looks Into Why

A survey conducted by Cantor Fitzgerald, involving 52 Illinois dispensaries and their flower SKUs, shows the state's retail prices are down 18% YoY.

Market Flower Retail Prices & SKUs In IL

According to the survey, Illinois flower prices (3.5g pack presentation) at $15.17/g are 25% higher than in Massachusetts, 23% higher than in Pennsylvania and 65% higher than in Florida. "Amongst all states for which we have conducted price surveys, IL prices rank only behind Ohio ($17.81/g) and New Jersey ($16.68/g)," noted Cantor Fitzgerald's Pablo Zuanic.

From the analyst's view, due to a few companies in the state (in his coverage) just doing retail, lower retail prices mean lower profits per gram.

Regarding total flower SKUs per dispensary "increased by 25% QoQ in IL (146 vs. 182) while they remained flat in FL and decreased by 10% in MA and fell 19% in PA," Zuanic said.

However, if the new 185 licensed stores in the state delay opening, prices could drop even lower, given the new capacity and the potential impact of Missouri going recreational. "Interestingly, IL wholesale prices remained stable through 12/2/22 ($3,510 per pound as per Cannabis Benchmarks), but are now at $2,471 (-30% in less than three months)," he noted.

Survey Highlights

  • Retailer spreads: "If we convert retail prices to a $/lb, we note flower retail prices of $6,798 ($15.17/g) compared with wholesale prices of $2,528 ($5.64/g). The latter means an average retailer gross margin in IL for flowers of 63%, or $9.53 per gram," per the analyst.
  • SKU Number: In Zuanic's view, the significant increase in SKU/dispensary is a result of additional capacity being brought online in anticipation of the soon-to-open 185 new licenses.
  • Range in SKU counts between operators: In Illinois, SKU counts vary a lot across operators compared with PA/FL. "We believe this is related to the rec vs. med market dynamics because SKU counts per operator also varied significantly in MA." 

In terms of total flower SKUs, Zuanic noted four companies had more than 182 flower SKUs per store on average in IL: Verano VRNOF (271), Cresco Labs Inc CRLBF (249), Green Thumb Industries Inc. GTBIF (243), and Private operator Windy City Cannabis (214).

Wholesale prices in the state as of 2/3/2023 were $2,528 per pound, and are down 31% YoY, according to Cannabis Benchmarks (CB).

Changing competitive retail landscape in IL: "We highlight above how in the near-term dispensary saturation will significantly increase in IL from 110k people per dispensary to 43k with an additional 185 dispensaries coming online," Zuanic concluded.

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