Illinois cannabis sales continue to break records in June
June cannabis sales in Illinois exceeded $47.6 million, breaking the record high previously set in May. The sales growth in both May and June has been driven by out-of-state residents with an approximately 26% contribution to June revenues. The state sold close to 1 million THC products through its 56 adult-use dispensaries. Despite the pandemic and recessionary economic conditions, 1H20 sales nearly hit $240 million in the first six months of legalized marijuana in the state. These results bode well for Midwest legalization and give players like Green Thumb Industries (GTBIF) and Cresco Labs (CRLBF) a stronger foothold in an adult-use state. The sequential growth and share between in-state versus out-of-state sales suggest robust residential consumption and strong potential for Illinois to become a tourist attraction for Midwest cannabis lovers and onlookers seeking to break the monotony of lockdown.
Canada has an inventory problem
As of April 2020, Canadian cannabis producers had approximately 620,000 kilograms of unpackaged dried cannabis inventory, a 10% sequential increase. In terms of packaged inventory, there were approximately 85,000 kilograms at a 12% sequential increase. The growing stock levels of cannabis are problematic for Canadian operators – unsold inventory will ultimately need to be written down or destroyed. Organigram’s recent downsizing and reduction in production capacity, as mentioned in yesterday’s Top 3, is likewise symptomatic of the lackluster demand in the Canadian market. This evening out between supply and demand will continue to be a headwind for companies that overinvested in production capacity.
Indus Holdings debuts new high potency cannabis product
Earlier this week, California’s Indus Holdings, Inc. (CSE: INDS) debuted a premium, high potency flower line called Cypress Reserve. Launching in statewide dispensaries, Cypress Reserve provides a THC potency of 25% or more. Their new product meets the market demand for higher-THC content in flower. The recreational merits of such a high THC potency are questionable – a University of Illinois at Chicago study in 2017 found that “7.5 mg THC dampened negative emotional responses without influencing performance,” but, “12.5 mg THC slightly but significantly increased negative affect overall.” Higher potency does not automatically equate to a better recreational experience; however, the premium price differential of high TCH product is a boon for producers and continues to appeal to the average cannabis consumer.
