Although United States (US) cannabis companies have been under pressure so far this year, we believe the market is in the early innings of hyper-growth cycle and are of the opinion that many operators (large and small) are undervalued.

Since 2020, several states have legalized recreational cannabis and we have been impressed by the growth of these markets. We consider Illinois and Michigan to be burgeoning recreational cannabis markets and are bullish on the long-term potential that is associated with the two midwestern states.

Earlier this week, the Illinois Department of Financial and Professional Regulations (IDFPR) published the amount of recreational cannabis revenue for March. The statistics from the report that we consider to be the most significant are:

When compared to January and February, total recreational sales revenue increased by approx. $13 million and $17 million, respectively
In-state sales increased by approx. $9 million and $11 million when compared to the prior two months, respectively, while out-of-state sales increased by almost $5 million
More that 3 million recreational cannabis products were sold which is more than 20% higher than January and February

In 2021, recreational cannabis sales in Illinois peaked in December (generated almost $138 million of revenue). When the state started to report lower recreational sales figures in January and February, many analysts became concerned with the trend and we believe this put additional pressure on the sector.

When compared to March 2021, total recreational sales in Illinois increased by almost 20% while the amount of products sold increased by almost 30%. This leads us to believe that the average price per product has declined and we will closely monitor this trend on a month-over-month basis.

In the first quarter of 2022, Illinois has generated more than $362 million of recreational cannabis revenue. This is significantly greater than the approx. $278 million of recreational cannabis revenue that was generated in Illinois in the first quarter of 2021. We expect the state to report more recreational cannabis sale revenue than it did in 2021 (approx. $1.38 billion) and are bullish on the long-term growth outlook of it.

If you are interested in learning more about companies that are levered to Illinois, please send an email to support@technical420.com with the subject “Cannabis Companies that are Levered to Illinois” to be added to our distribution list.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.