Flaws in the Illinois state legislature’s bill to legalize cannabis for recreational use has led to statewide shortages in the product, particularly for the nearly 100,000 registered medical cannabis patients, according to a review of state documents and interviews with those in the industry.
Indeed, since the medical cannabis program launched in Illinois in 2014, complaints filed by medical patients against dispensaries in the state have soared, as 102 out of all 267 complaints were filed in 2020 alone.
David Kurfman is a registered Illinois cannabis patient from Mount Sterling, who has been using the plant to treat his epilepsy since 2015. He believes the state has not done enough to protect its medical cannabis patients during a time when there is higher demand than supply can adequately meet.
“It’s been dismal for medical patients,” Kurfman said. “Patients cannot consistently find the specific products that they need for their various conditions.”
The new law, which was passed by the legislature in May 2019, took effect on January 1, 2020.
The state did not have an adequate supply of legal cannabis — which cannot be imported from other states under federal law — to meet the high recreational demand, said industry analysts and experts employed in the Illinois cannabis industry.
Andy Seeger, the manager of cannabis research at Brightfield Group located in Chicago, believes the state could have done a much better job in getting ready for the law to take effect and to prevent the current supply shortages that are affecting medical patients’ abilities to have convenient access to the products they need.
“Other states allowed cultivation prior to opening as a grace period when firms could grow with no license as they awaited review, allowing for more product on day one,” Seeger said. “Illinois did not.”
In May 2019, Illinois became the first state in the country to pass recreational cannabis through the legislative process rather than a ballot initiative.
“The state saw the quickest way to open sales was to expand on the current and formerly heavily restrictive medical market,” Seeger said. “By restricting the market to only those that were involved medically, the state heavily restricted the market in terms of product and heavily consolidated in terms of market share.”
Seeger believes that the state’s flawed approach is shown by the initial decline in cannabis sales. Sales declined to $34.8 million in February after $39.2 million in sales in January before bouncing back in March, according to IDFPR. According to Brightfield Group, the states that legalize recreational cannabis usually see revenues steadily increase as more growers’ licenses are granted, but Illinois is different due to licensing limits in the legislation.
“The state, however, seems happy with the tax figures and high demand,” Seeger said.
The state collected almost $8.5 million in cannabis tax revenue in March and $11.5 million in recreational cannabis tax revenue in April, according to the Illinois Department of Revenue database.
Push for prioritizing medical patients
The Illinois Department of Professional and Financial Regulation has tried to ease the burden on medical patients by sending a letter to all 41 dispensaries that serve both medical and recreational customers urging them to prioritize medical patients during the supply shortage. The department states that the new law does not provide specific guidance on how dispensaries are supposed to prioritize medical patients during a potential shortage of product, but it gives its own view on how dispensaries should do it.
The department also issued a notice to dispensaries allowing them to remain open until 10 pm, which is the closing time for recreational sales, for medical sales, who had previously been limited to an 8 pm closing time. The notice also includes a link for medical cannabis patients to file complaints with the department if they feel that their needs are not being met.
Sunnyside and NuMed are the two dispensaries in Champaign-Urbana area. Sunnyside declined to comment when contacted, and NuMed did not respond to a request for a comment.
One of the Illinois’ main goals in introducing the medical cannabis market in the state in 2014 was to offer opioid patients a reliable and safer alternative, but the state has inadvertently hurt the market with the new law.
“The state has responsibility to maintain the medical market it established. It currently seems unable to handle the tasks of both medical and adult-use overnight,” Seeger said. “Margins are very thin, and prices remain high on the back of low supply. The legal plants in the ground on January 1 to come to the market would take roughly 14 to 18 weeks, but low supply is likely to last for the foreseeable future, even into the fall and perhaps next year.”
Medical patients unhappy
Even with the state’s attempt to address the issues for medical patients that have resulted from the new cannabis law, many medical patients are not satisfied with the results. During a time of product shortage, medical cannabis patients are put in the tough position of having to potentially grow their own medicine, which can take much time and care.
State law allows registered medical cannabis patients to grow up to five cannabis plants in their own homes, and Kurfman of Mt. Sterling decided to take advantage of this provision in the law. Having a consistent medical supply at home can help alleviate the need for patients to rely on dispensaries that are consistently low on supply.
Kurfman has been able to transition from pills to cannabis oils for the prevention of seizures, but the statewide shortage has put his ability to consistently rely on the special oils that work best for epilepsy in jeopardy.
Because growing cannabis for medical use requires the best resulting harvests, medical patients are faced with this challenge when they decide to grow their own medicine. Kurfman has turned to two mentors for guidance during the process of growing the highest quality medicine.
“I need to have access to the meds that I know I need to prevent seizures without having to find and travel far to a dispensary that has what I need,” Kurfman said. “The shortage along with recreational sales has led to the inconsistent supply of the best products.”
Kurfman is also a proponent of a proposed amendment to the Compassionate Use of Medical Cannabis Act that would help alleviate the current situation medical patients are facing with the shortage of product. Amendment SB2295 would require the Illinois Department of Agriculture to register exactly the 22 cultivation center licenses that are allowed by law rather than any amount up to that limit.
“The medical cannabis law requires that the state issue 22 licenses for cultivation facilities. That license was applied for, but the state hasn’t granted it,” Kurfman said. “The company that has applied for the last cultivation license already has a facility ready to go.”
If a new cultivation facility needs to be built, it could be over a year after becoming licensed that the new cultivation center has products available. Kurfman also met with two politicians in Springfield who were major proponents in the legalization of recreational cannabis, and they did not express support for amendment SB2295 to help get more product available for medical patients.
Adult use growers licenses to be issued
The current cannabis bill provides that 75 adult use grower licenses will be issued by July 1 of 2020 in addition to the currently 47 registered adult use grower licenses. However, this may not be enough to help the supply meet the current demand in the large state.
In comparison, smaller states have not had issues with supporting both their medical and recreational markets because they have hundreds of licensed cannabis growers. Nevada, which is about a fourth of the size of Illinois, has over 130 licensed growers. Colorado has almost 700 licensed growers, even with less than half of Illinois’ state population. According to New Frontier Data, an independent data analytics company that specializes in vetting data in the cannabis industry to serve industry leaders, Illinois might see cannabis shortages continue for as long as the next couple of years.
Brandon Nemec, a spokesperson for dispensary chain PharmaCann, explained some of the effects that the Illinois cannabis shortage has had on their business in the state.
“As expected, coming into Illinois’ first year of adult use cannabis sales, demand has been extremely high, particularly for cannabis flower,” Nemec said. “Now into the second quarter of sales, PharmaCann has taken several steps to serve as many adult use customers as possible, including maximizing production and working closely with third party Illinois suppliers.”
In this case, it is the recreational program that is taking the largest impact of the supply shortage. In times of shortage, medical patients are supposed to take priority in terms of product availability, and that is what PharmaCann has had to do.
“In some cases, we have had to place limits on adult use flower purchases based upon daily inventory and forthcoming supply at a particular dispensary, and these limitations can change week to week depending upon purchasing patterns,” Nemec said. “As we work diligently to keep up with adult use demand, we always maintain a priority reserve for our medical cannabis patients, and to date have not placed any limits on products for medical patients.”
As an essential business during the COVID-19 pandemic, PharmaCann has been taking this designation seriously as it has taken precautionary safety steps to protect public health that have contributed to a recent decline in sales. Nevertheless, the dispensary chain has not given up on expanding their production to meet the demand of both medical patients and recreational customers in the state.
Covid-19 slows operations of cannabis industry
The COVID-19 pandemic has put an unexpected hold on the normal day-to-day operations of the cannabis industry in Illinois. On March 16, five days after the World Health Organization officially declared the COVID-19 outbreak as a pandemic, the Illinois Department of Financial and Professional Regulation issued a notice to dispensaries and medical patients regarding the state’s plan to handle the pandemic.
The first major change outlines the state’s plan to temporary allow a temporary variance to the Compassionate Use of Medical Cannabis Program Act. The state is now allowing medical patients to purchase cannabis products from a dispensary without having to be inside of the store as the law requires. The sale must still take place on the property or within the vicinity of the dispensary as cannabis is still not legal for delivery in the state.
This allows patients and dispensaries to practice the social distancing guidelines recommended by the CDC. The statement points out that this temporary variance does not apply to recreational customers.
The department is also asking that dispensaries enforce social distancing inside of their stores in accordance with the CDC guidelines of a recommended 6 feet of distance between customers. This means that a dispensary must intervene when a cluster of people are too close to each other. The goal is to limit the time of human contact as much as possible.
Sanitary practices are also being ordered as the department has informed dispensaries that they must be thoroughly engaged in sanitation practices. Employees must wash their hands frequently, and they must sanitize surfaces that customers come into contact with every 30 minutes.
The department monitors the compliance with these guidelines through the use of camera watching. Inspectors must contact dispensaries that are not in compliance.
Additionally, medical card applicants are no longer required to schedule an appointment for an in-person examination with a physician to receive certification for medical cannabis use. Instead, the state is allowing for telemedicine, which allows physicians to diagnose conditions remotely through telecommunication.
On April 29, the department issued a press release in response to the pandemic indicating an executive order that delays the issuing of new recreational cannabis sale licenses. The department was set to issue up to 75 new recreational licenses by May 1, and a new date has not been announced.
This is another setback for the state’s legal cannabis market as it had already been dealing with a severe shortage of state-grown legal product before the pandemic began.
Governor Pritzker’s Senior Advisor for Cannabis Control Toi Hutchinson is quoted as saying that she understands the disappointment this causes for the entrepreneurs who were excited to join the industry.