Missouri Continues to Siphon Marijuana Customers from Illinois

Illinois saw nearly 17% less sales from nonresidents in March versus last year.

The number of out-of-state buyers coming to Illinois for cannabis dropped in March, a signal that neighboring Missouri’s booming recreational market continues to lure customers away.

In just two months since allowing adult cannabis sales, Missouri has sold more than $229 million worth of cannabis, putting the state on track to sell more than $1.4 billion in its first year.

The news makes Missouri one of the top ten cannabis markets in the U.S. In March, the state sold $93.5 million in adult-use cannabis and $32.7 million in medical marijuana.

Local communities in Missouri are also approving marijuana sales tax measures, and insiders say the program is set to have mostly a positive impact on the state economy, with it considered one of the most customer-friendly in the country.

Comparatively, Illinois, with twice the population, generated less than $60 million in cannabis sales in its second month of adult-use sales.

But Illinois retailers still raked in $134.8 million in sales for the month.

The findings from the Illinois Department of Financial and Professional Regulation’s monthly report include data on the total sales, broken down between both in-state and out-of-state residents.

Overall, Illinois sales data shows a typical climb in sales after February, based on historical data that shows spending activity tending to pick up through March. But out-of-state sales have continued to drop off versus comparable periods in 2022, before the recreational floodgates in neighboring Missouri opened two months ago.

Illinois saw nearly 17% fewer sales from nonresidents in March than during the same time last year, up from the 15% drop in February.

In Illinois cannabis stores located near the Missouri border, the decline was even more significant.

Missouri dispensaries sold almost $71.7 million worth of recreational marijuana in their first month, a milestone that took Illinois nearly a year to achieve.

The overwhelming success of the launch led many local governments to consider implementing their own taxes on recreational marijuana sales. Additionally, over 15,000 past nonviolent cannabis offenses have already been automatically expunged following the passage of Amendment 3 in November, and the figure is expected to increase throughout 2023.

Missouri’s Medical Market Wanes

While Missouri’s market is flourishing with the introduction of adult-use sales – so much so that local operators last month signaled a shortage on the horizon – the number of medical patients has been declining.

For two consecutive months, the state received fewer than 5,000 new patient applications, a meaningful drop versus previous figures. Between November 2022 and March 2023, the state lost more than 15,000 patients.

However, an upcoming tax increase could slow down this decline in patient numbers. Medical marijuana patients will continue to pay a 4% sales tax, while adult-use consumers will see tax rates rise from 6% to 9% or even 12%.

The cost savings of a three-year medical license versus the higher taxes for recreational users could encourage more people to remain or become medical marijuana patients.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at adam.jackson@crain.com.

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