Illinois consumers continued setting records for buying cannabis products and enjoyed lower prices due to increased competition, but sellers’ revenue shrank, a new state report shows.
Total reported retail sales dropped to about $1.5 billion in fiscal year 2026, down from nearly $2 billion the year before, according to the state’s annual cannabis report.
Perhaps a truer barometer of the market may be total state cannabis retail tax revenue, which also declined, but not nearly as much, to $423 million, a reduction of 3.6%.
Part of the big drop in sales revenue may be due to a change in the state’s inventory tracking system. The state’s previous BioTrack system counted prediscount prices, while its new Metrc system includes those discounts, which creates an “apples to oranges comparison,” according to Kimber Beckler, spokesperson for the Illinois Department of Financial and Professional Regulation.
Despite the change, officials said cannabis sales tax was calculated consistently from year to year.
In an encouraging sign for retailers, sales totals for July and August, the first months to compare under the new Metrc system for both years, showed increases of about 10% and 6.6%.
Statewide, consumers are seeing more choices since the state added 29 new dispensaries, increasing the number of stores by 10%.
And under a wide-ranging new law, Illinois this year also began allowing all stores to sell medical marijuana, began allowing drive-thru windows and curbside pickup, and doubled the amount of cannabis that buyers can keep.
Ever since the state legalized sales of recreational-use cannabis starting in 2020, consumer demand has continued to grow. The number of “adult use” or recreational items sold has climbed steadily, to more than 5 million in July, while the number of medical cannabis items has continued to fall, to about half a million.
“There are more locations, and the product is more accessible, so the number of items sold is still going up; however, because of a growing supply of legal cannabis in the market, prices are dropping with dispensaries offering frequent sales and promos,” Beckler told the Tribune. “This is beneficial to the consumer.”
But what’s good for the consumer may be challenging for businesses, warned Scott Redman, founder of the Illinois Independent Craft Growers Association.
“Overall, you’re seeing price compression,” he said. “That’s always been expected, and it’s going to continue. More dispensaries, unless they’re in locations that are underserved. It just divides the pie into more pieces.”
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That trend could be accelerated by a new proposed rule that would allow growers to cultivate cannabis outdoors in greenhouses or other fenced-off areas, for use in edibles and infused products. Outdoor growing uses much less energy and is much cheaper, which Redman said could further lower retail prices.
The highly regulated licensed stores have lost customers to competition from unlicensed intoxicating hemp products, which are sold with very little regulation in gas stations, convenience stores and smoke shops. Those products are scheduled to be banned by law in November in Illinois, and in December nationwide, which licensed dealers had wanted.
Illinois, which traditionally has had some of the highest weed prices in the nation due to limits on the number of growers and stores, also has lost market share to licensed shops in neighboring states like Michigan and Missouri. Those states have lower prices due to lower taxes and the greater number of growers and stores.
As a result, Illinois sales to out-of-state residents had dwindled significantly, though that trend has reversed since Michigan imposed a new 24% wholesale tax on recreational marijuana starting this year, in addition to its 10% retail tax.
The state reported it had 177 social equity licenses, defined as those with owners or employees with past low-level marijuana convictions, or coming from areas with high rates of poverty or that have had high rates of arrests and imprisonment for cannabis.
Among dispensaries, 38 were majority-owned by women, 103 majority-owned by people of color, but zero majority-owned by people with disabilities.
The 29 retail store licenses issued in the fiscal year 2026, which ended June 30, was a significant drop from the 93 issued the previous year and 82 in the year before that, as financing has dried up. But the number of licenses transferred increased each year, from 21 to 36 to 50, reflecting continued consolidation in the industry as large multistate organizations gobble up smaller, independent operators who often are struggling to survive.
The identities of owners in the business remain largely hidden by state laws that still keep license applications secret, six years after legalization. But regulators say they will be taking unspecified steps this year to increase ownership transparency.
Among employees, 23% identified as people of color, 46% as women or nonbinary, and 9% as people with disabilities.
Despite legalization, illicit cannabis trafficking remains prevalent throughout the state, with legal and illegal markets competing on price, potency, and availability, Illinois State Police reported. In the past two fiscal years, patrol troopers seized more than 47,000 pounds of illegal weed.
Chicago is the primary distribution point for illicit cannabis in the Midwest, police said, often via narcotics dealers, fed primarily by oversupply from Michigan, California and Oregon.