MF highlight an argument pushed by MJ Biz, writing. “Illinois’ restrictive retail licensing approach that’s designed to deter business monopolies and oligopolies may actually incentivize consumers to shop in the illicit market.” We respectfully disagree.
It’s a poor argument to say that monopolies, duopolies and oligopolies will steer users towards the regulated market. In fact we’d argue the opposite.
Just imagine if coffee were regulated in the same way as cannabis and the only places we could buy the world’s favourite hot beverage from, were the following paragons of quality, Starbucks, Dunkin’ Donuts & McDonalds.
Would consumers not go to small(illegal) roastaries to locate coffee that actually tastes like coffee. Our limited experience of a small amount of players in a large consumer market always points to profit over quality.
Illinois may not have a perfect plan for regulated cannabis; who does? Here at CLR we’d much rather see legislation that allows for smaller local players to build brands and loyal local customer bases that rely upon interaction with the customer and their needs rather than a top down supply system based on capturing the numbers.
Looking at what MF are saying the market is a short term numbers game to satisfy shareholders rather than a long term approach designed to bring consumers from a black market that amongst other things exploits people, the environment and provides little choice.
Here at CLR our fingers are firmly crossed for Illinois.
Here’s the Motley Fool case for having less & larger players in the market
Illinois
Another state that’s about to make life incredibly difficult for cannabis companies is Illinois.
In June, Illinois became the first state in history to legalize the recreational possession and sale of cannabis entirely through the legislative process. The new law may also allow nearly 800,000 residents to have their previous convictions for possession or use of cannabis expunged, assuming there was no violence associated with the conviction. With sales commencing on Jan. 1, 2020, the needle should be pointing green in the Land of Lincoln.
However, as pointed out by Marijuana Business Daily, Illinois’ restrictive retail licensing approach that’s designed to deter business monopolies and oligopolies may actually incentivize consumers to shop in the illicit market. You see, Illinois has capped the number of retail locations that can be opened by a single company at 10, once the green flag waves on recreational sales. That means a maximum of 110 retailers can sell recreational pot on Jan. 1, 2020. Even with regulators expected to award 75 new retail licenses by May 1, 2020, we’re only talking about a maximum of 185 licenses in the state by the end of 2020. In other words, Illinois will also have about 1.5 open dispensaries per every 100,000 residents. That’s about a tenth that of Oregon.
Looking out even further, the cannabis legislation passed by Illinois in June stipulates that the state cannot have more than 500 open dispensaries. In short, the state doesn’t even have a chance to reach four open dispensaries per 100,000 residents.
And, consistent with California, Illinois’ jurisdictions have the final say on whether or not to allow recreational weed retail stores. The expectation is that a number of more conservative parts of the Land of Lincoln will ban retail locations, thereby keeping licensed retailers from opening the maximum number of stores allowable by law.
If there were one company to single out here that should be concerned, it’s Cresco Labs (OTC:CRLBF). Even though most eyes are on Cresco’s pending acquisition of Origin House, the company is planning to have the maximum 10 open locations in Illinois by January. But with so few open retail locations, it’s unclear if legal-channel pricing will be able to compete with the black market. Given how aggressive Cresco Labs has been in expanding its multistate presence, it’s going to need a good showing from Illinois to drum up investor support. Unfortunately, this slow rollout of dispensaries suggests that the recreational pot market in Illinois may mature a lot slower than many folks realize.
Source: https://www.fool.com/investing/2019/11/10/these-2-states-are-sabotaging-their-respective-mar.aspx
