Missouri’s Booming Recreational Cannabis Market Attracts Out-of-State Buyers, Hurts Illinois Sales

LOS ANGELES– In March, out-of-state sales for cannabis in Illinois dropped by almost 17%, signaling that neighboring Missouri’s thriving recreational market is still pulling customers away. This news comes just two months after Missouri allowed adult-use cannabis sales, and the state has already sold over $229 million worth of cannabis, setting it on track to sell over $1.4 billion in its first year. The success of Missouri’s market has placed it among the top ten cannabis markets in the United States, with the state selling $93.5 million in adult-use cannabis and $32.7 million in medical cannabis in March alone.

As local communities in Missouri approve cannabis sales tax measures, the program is expected to have a mostly positive impact on the state economy, as it is considered one of the most customer-friendly in the country. In contrast, Illinois, with twice the population of Missouri, generated less than $60 million in cannabis sales in its second month of adult-use sales. Nevertheless, Illinois retailers still managed to earn $134.8 million in sales for the month.

The Illinois Department of Financial and Professional Regulation’s monthly report shows a typical climb in sales after February, with spending activity tending to pick up through March. However, out-of-state sales continued to drop off compared to comparable periods in 2022, before Missouri opened the floodgates for recreational cannabis 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 cannabis 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 taxes on recreational cannabis sales. Additionally, more than 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.

However, while Missouri’s market is flourishing with the introduction of adult-use sales, 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 compared to previous figures. Between November 2022 and March 2023, the state lost more than 15,000 patients. Nevertheless, 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 cannabis patients.