Illinois’ cannabis industry hit new heights in fiscal year 2024, with adult-use sales eclipsing $2 billion and dozens of new dispensaries opened their doors. But the latest annual cannabis report from the state also reveals a market still wrestling with persistent illicit sales and an emerging threat from unregulated hemp-derived products.
The report, compiled by the Cannabis Regulation Oversight Office with the help of several state departments, showed tax revenue from cannabis sales reached $457.3 million by the end of what was dubbed “a year of explosive growth,” with 82 new dispensaries opening, bringing the statewide total to over 200.
Illicit market woes
Those success were shadowed by concerns from state officials about competition from the illicit market.
“Even though the shifting of law enforcement resources has migrated away from minor cannabis offenses, the ongoing presence of illicit cannabis being brought into Illinois still demands significant resources,” the ISP stated in the report.
The report specifically called out Chicago, noting that high-potency cannabis from other states enters the region around the city and is injected into the illicit market.
The Illinois State Police seized approximately 12 tons of illicit cannabis in fiscal 2024, valued at $63.7 million. Data from the International Cannabis Policy Study estimated that “nearly 36% of the Illinois cannabis market is from illegal sources.”
A separate memo cited by officials noted that most unregulated cannabis available in the Chicago HIDTA region comes from Mexico.
“However, over the past few years, both the volume and sources of supply have expanded to include Asian Drug Trafficking Organizations and both illegal and legal growers located along the U.S. West Coast, Pacific Northwest, and other states,” it said.
The persisting presence of unregulated weed in the state may also be driven in part by price differentials. While legal dispensaries charge an average of $330 per ounce after taxes, street prices hover around $200 per ounce, according to data from task forces and MEG units cited in the report.
Heavy-hitting hemp
Hemp-derived products pose another challenge for regulators. The Illinois State Police Cannabis Control Office mentioned the proliferation of synthesized THC products marketed as “hemp-based” or “CBD” that are often mislabeled and fall into a legal gray area.
“To produce the products, delta-9 tetrahydrocannabinol (THC) has been artificially synthesized from a CBD product and sprayed, or otherwise incorporated, back onto another (usually legal) hemp, food, vape or other product,” the report said.
It cited more specific prosecution challenges due to legal ambiguities.
“ISP, often in collaboration with local law enforcement, has struggled in convincing State’s Attorneys to move forward with prosecution of sale of allegedly hemp-derived products above the 0.3% THC limit, which are illegal under state and federal law,” the CCO reported.
“Clarification in legislation would certainly help,” it added.
The report called for a “regulatory framework for all hemp-derived THC products,” such as delta-8 THC, THC-O and other THC variants.
But it also specifically singled out high-THCA content hemp flower for exploiting legal loopholes.
“First, THCA is defined as THC under the (Cannabis Regulation and Tax Act),” it said. “These products often have THCA contents as high or higher than cannabis flower sold in licensed cannabis dispensaries in the state.”
“Purveyors of THCA products often claim they are compliant with federal hemp legislation; however, the DEA recently clarified their stance on federal legislation confirming that in determining total THC content of a product, THC-A must be included in that calculation.”
While it’s true the Drug Enforcement Administration said it considers THCA to be a controlled substance, a recent federal appeals court challenged that, ruling that products defined as hemp under federal law remain hemp regardless of processing, which could take the issue out of the state’s hands entirely.
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