Illinois Cannabis Processors Poised for Solventless Extraction & Rosin

https://gopurepressure.com/blogs/cannabis-news/the-illinois-cannabis-market-rosin

Adult use cannabis laws took effect in Illinois on January 1, 2020. In the first few weeks of sales, the state has seen a rush of customers, leading to a surge in medical cannabis applications amid fears of shortages and a desire for lower sales taxes. While that may seem like a downer note, a shortage is common early on and often serves as a point in the state’s early market developments. Usually, states rebound and recover on their way to establishing a thriving market.

Many expect this to be the case in Illinois, where many predict that the state will couple with Michigan to help establish the Midwest as sales leaders in the American cannabis market. Applications for specific licenses have been well underway. And it is expected that extraction and processing licenses could be handed out in July of this year.

Whether entering into the extraction space or elsewhere, entrepreneurs need to take warning of the fierce competition expected. With a likely booming market on the horizon, several experts forecast “stiff competition.” Chicago and its surrounding area, as expected, will be site to much of the competition, with 63% of retail cannabis licenses going to the region in 2020. Dispensaries across the state will have to fight for customers, with the state averaging 1.5 licensed sales locations for every 100,000 citizens.

Despite the rather slim ratio, demand should eventually satisfy much of the market. Consulting firm Freedman and Koski estimate yearly demand to reach 350,000 to 550,000 pounds of dried cannabis. That said, the firm warns that the market could be slow to grow at first, noting trends that other states followed. These trends include the illicit market continuing to thrive for some time until legal market prices decline to competitive levels.

Those that can weather the rounds of storms and position themselves correctly could find their venture with a significant market share of the estimated $2.5 billion dollar a year market awaiting Illinois.

Illinois appears poised to be a destination for competition and success for those that come out on top. We believe that rosin and other solventless products will be vital in offering businesses a superior ROI at a fraction of the startup costs compared to a solvent-based venture.

In this article, we’ll delve into how Illinois got here, possible setbacks to expect and just why your business should include solventless cannabis products in its portfolio of products.

The Development of Illinois’s Cannabis Market

Illinois, technically, was one of the earliest adopters of cannabis legalization after the drug prohibition took effect in the 1930s. In 1978, the state passed the Cannabis Control Act, which allowed medical cannabis use. Keep in mind the word “technically.” In reality, two key hurdles made it so the state Department of Human Services did not have to require doctors to give medical cannabis recommendations. Nor did is allow the program to act outside of the state police’s written laws. Meaning, the law was mainly passed in spirit.

While the CCA of 1978 laid dormant all these years, Illinois did join the more recent medical marijuana wave, enacting legislation in 2013. The state followed up by passing decriminalization laws two years later in 2016.

On May 31, 2019, the state took its next step forward when the General Assembly legalized adult use laws with the passage of the Cannabis Regulation and Tax Act. The bill would become law in August when Governor J.B. Pritzker signed off on the expansion. Now in its infancy, the Illinois cannabis market appears to be falling in line with the path of its predecessors. If it continues to follow such a way, the demand for rosin and other solventless concentrates in Illinois should represent the likely lucrative opportunities for ventures ready to stake their claim.

Opportunities Expected in the Illinois Cannabis Market

While the headline is accurate, the opportunities in Illinois could be limited to a choice few. In addition to limited availability, the state appeared to show no interest in making the application process easy on prospective owners.

Some state policy experts on the matter described the application process as a rather trying process. Applicants should expect to be asked for a variety of documents when submitting for a license. Such materials include business plans and a list of owners and operators as well as their expertise. Additional information pertaining to record-keeping and employee training is also expected to be submitted with an application.

When submitting, businesses can apply for one of four types of cannabis operations:

1. Dispensary
2. Cultivator (Craft and Grow Ops)
3. Processor
4. Transporter

The state opened its application window for processors, transporters and craft growing, which it will begin reviewing on February 14. Illinois plans to begin processing these licenses on March 15, 2020. It is expected that new dispensary licenses will go out first, starting in May, while craft grower, processor and transporter licenses will go out in July.

The rollout of the licenses may not be such a cause for celebration. Illinois opted to follow a path many states have and cap the number of licenses issued to the nascent market. In the dispensary space, 55 licenses have been issued by the state, with another 75 coming via the May issuing mentioned above. An additional 110 will go out on New Year’s Day 2021, totaling 300 dispensary licenses in the state. Another 200 could come by January 2022. Meanwhile, craft growers are expected to be issued 100 permits.

Other parameters the state enacted include social equity measures, which aim to address some of the adverse effects brought on by the drug war. It has been reported that the state Department of Commerce and Economic Opportunity intends to work with local banks to enact loan programs. These programs plan to provide business mentoring along with the capital to get started.

So, while opportunities may be slim, the competitive nature of the market indicates lucrative gains for those looking to stake their claim in the Illinois cannabis market. The state appears committed to providing access to those most affected while allowing all other applicants to be part of the four license types being offered in the coming months.

With supposed fair access, those that feel as if they qualify should either have their applications in already or get started on it fast. The time invested could prove to produce earned results well beyond your sweat equity.

Analyzing the Market to Date

Heading into the legalization of adult use, Freedman and Koski’s report stated that understanding the prospective market would be challenging, despite many forecasting substantial gains for the state. The report stated:

“Changes in markets (prices, supply, quality, accessibility, etc.) can have dramatic effects on consumer behavior. Under the current proposal in Illinois, not only would consumers have the choice between using or not using cannabis, but cannabis users have alternatives: purchasing from a legal, commercial market; home growing cannabis; or continuing to buy from the criminal market. Those choices are influenced by consumer preference ex ante as well as the dynamics of the market as it matures.”

In addition to the uncertainty of the market, staggering tax rates were quickly pinpointed as significant pain points for businesses and consumers. In some cases, buyers were paying up to an additional 40% on products thanks to the state’s second-highest cannabis tax burden in the legal U.S. market.

Yet, despite the sticker shock turning many to the illicit market, the state proved to rollout a relatively successful debut for the adult use marketplace. Long waits on opening day resulted in exceptional Day One sales, nearly totaling $3.2 million.

The demand became so high that several stores across the state reported running out of product in the first few days of opening their doors. “We knew we were going to run out. It was a matter of when, not if,” said Neal McQueeney, principal officer of Midway Dispensary, to Marijuana Business Daily in the early days of the market’s opening.

By the end of the first week, Illinois saw $11 million in legal cannabis product sales generated. With such opportunity afoot, those fortunate enough to get licenses could likely end up on the receiving end of a windfall gain.

High Time to Consider Entering the Illinois Solventless Market

With processing licenses underway, hopeful applicants need to get their paperwork in line and submitted as soon as they can. Those granted a permit are recommended to explore the possibility of offering rosins and other solventless-derived products in Illinois.

Consider us a bit biased, but solventless is the best concentrated product in today’s market, and now one of its top sellers, too. With a slew of brands and producers looking to stand out, the versatility of a truly chemically-free produced source material is sure to kickstart creative ideation in your team.

Being 100% solvent-free and versatile is all well and good. Still, it’s not a sustainable investment unless the numbers back it up. Fortunately for your business and rosin, there is back up.

According to a 2019 top trends in cannabis report from Arcview Market Research and BDS Analytics, concentrates and edibles continue to see their shares in the market grow with each passing year. In 2017, the two verticals combined to account for $1 billion of the market. In 2019, they reached $2.2 billion. By 2022, the report expects that number to nearly double again, reaching $4.1 billion.

The report went on to show that sales appear prosperous in both the medical and recreational sides of the market. Adult use should drive U.S. and Canadian growth, according to the report”s conservative model projections. Processors would be wise not to overlook the booming CBD market either. As of 2018, concentrates held the second largest market share, only behind ingestibles, with 28% of the market.

That said, those that do receive processor licenses in Illinois should keep an eye out of developing trends in more mature markets. This includes Colorado, where concentrate prices declined 2% over the past three years.

Continued growth over the next 10 years is expected at 6% percent per year and it might go even higher depending on the new licenses for more Cannabis store locations that will be outfitted with custom display cabinet designed to display these new hemp product lines.

www.MarijuanaDisplayCabinets.com

www.CustomVitrines.com