7-minute read
Illinois was supposed to be the one that got it right.
In 2019, it became the first state in the country to legalize adult-use cannabis through its legislature — not by ballot initiative, but through the deliberate act of elected officials passing the Cannabis Regulation and Tax Act (CRTA). The law didn't just legalize weed. It came loaded with promises about social equity, economic justice, and creating a cannabis industry that would look different from the ones that came before it. Governor Pritzker called it "the most equitable cannabis industry in the country."
Six years later, Illinois has frozen new cannabis licensing indefinitely, the social equity program has been a disaster for most of the people it was supposed to help, and the state just recorded its first ever year-over-year decline in recreational cannabis sales revenue.
So much for getting it right.
The Freeze
In June 2025, state Rep. La Shawn K. Ford confirmed to Crain's Chicago Business that Illinois had put the remaining 137 dispensary permits on hold indefinitely. Under the CRTA, the state caps total adult-use retail licenses at 500. As of the announcement, 260 shops were operational and another 103 entrepreneurs held "conditional licenses" they'd won through permit lotteries — the most recent held in July 2023.
The problem? Those 103 conditional license holders were struggling to actually open their doors. The pause applied across all categories — dispensaries, craft growers, infusers, and transporters — effective July 1, 2025, through at least February 2026.
Ford's reasoning was straightforward. "What we're focused on is making sure the current conditional licenses have the ability to scale up and attract investors," he told Crain's. "That's the goal."
On paper, that sounds reasonable. In practice, it's an admission that the system Illinois built — the one that was supposed to be a national model — doesn't work.
The Social Equity Disaster
Let's talk about what went wrong, because it's a long list.
Illinois designed its social equity program to prioritize people from communities that were disproportionately impacted by the War on Drugs. Applicants with cannabis-related records, or from neighborhoods that saw heavy drug enforcement, were supposed to get a real shot at the legal industry. The state held lotteries, awarded conditional licenses, and patted itself on the back.
Then reality kicked in.
Establishing a cannabis business in Illinois — a dispensary, a craft grow, any of it — requires millions of dollars for real estate, construction, and operations. And because cannabis remains federally illegal, these businesses can't get traditional bank loans. So the people the program was supposed to uplift — people from marginalized communities, people with cannabis records, people without generational wealth — were handed licenses and told to go find investors in an industry where the money doesn't want to touch you.
Michael Mayes, CEO of the cannabis consulting firm Quantum 9, didn't mince words when he spoke with Green Market Report about the situation. He called the way social equity has been handled in Illinois "a total disaster."
The numbers bear him out. The state has issued 88 craft grower licenses, but as of recent reporting, only 29 are operational. That means roughly two-thirds of licensed craft growers in Illinois have never opened their doors. Of the 103 conditional dispensary licenses awarded through lotteries, few have managed to scrape together the capital to get off the ground.
The state has tried to help — sort of. Through the Cannabis Social Equity Loan Program, Illinois has made forgivable loans available to social equity licensees — $8.75 million in the most recent round. But when a dispensary buildout can cost several million dollars, a loan of up to $240,000 is a Band-Aid on a compound fracture. Meanwhile, the large multi-state operators (MSOs) that got first-mover advantage under the original medical program continue to dominate the market.
As the Benesch law firm bluntly put it in its 2025 Illinois cannabis outlook: without legislative intervention, the bottlenecks will persist, reinforcing the dominance of large MSOs at the expense of smaller, independent cannabis businesses.
So the equity program created a two-tier system: well-funded MSOs that got in early and dominate the market, and underfunded social equity entrepreneurs who won a lottery ticket to a business they can't afford to open. And now, instead of fixing the underlying problems, the state hit pause.
The Tax Problem Nobody Wants to Fix
Of course, it wouldn't be a cannabis regulation story without absurd taxes.
Illinois has one of the highest cannabis tax burdens in the country. The state uses a tiered excise tax based on THC content: 10% for products with THC at or below 35%, 20% for edibles, and 25% for anything above 35% THC. Stack on the 7% cultivation privilege tax, the 6.25% state sales tax, and whatever local municipalities decide to tack on — cities can add up to 3% and counties up to 3.75% — and you end up in a situation where consumers in places like Chicago and Cook County are paying over 40% in total taxes on a legal cannabis purchase.
For comparison, Michigan taxes cannabis at a flat 10% with no additional local cannabis taxes. It's no wonder that Illinois cannabis prices have historically been more than double those in neighboring Michigan.
And guess what happens when your legal product costs twice as much as what's available across the border or down the street at an unregulated hemp shop? People go elsewhere. The Cannabis Equity Illinois Coalition urged the state to lower its cannabis taxes to make the legal market more competitive, but Springfield hasn't been able to agree on much of anything when it comes to cannabis reform. Legislative gridlock has paralyzed any effort to make common-sense changes — whether it's tax reform, hemp regulation, or fixes to the licensing process.
The Revenue Slide
For years, Illinois cannabis was considered a money-printing machine. Total sales generating exceeded $2 billion in 2024, over $490 million in tax revenue. Politicians loved the numbers. Press releases flew.
Then 2025 happened.
For the first time since legalization, annual recreational cannabis sales revenue declined — dropping 13%, from $1.7 billion to $1.5 billion. The kicker? Illinois retailers actually sold more product — 52.1 million units in 2025, up from 49 million in 2024. They just made $200 million less doing it, because prices are cratering. The average price per ounce has collapsed from over $400 when recreational sales began in 2020 to roughly $167.
The culprits are familiar: price compression from overproduction nationwide, competition from the unregulated intoxicating hemp market that Illinois has failed to regulate, and consumers crossing the border to Michigan where prices are lower.
Dispensary taxes still brought in $438 million for fiscal year 2025, which sounds great until you realize that the trajectory is pointing the wrong way — and that closures are already happening. Dispensaries like Okay Cannabis in Wheeling and Spark'd in Crystal Lake shut down in recent years. The industry that was supposed to be recession-proof is starting to crack.
The Freeze Doesn't Fix Anything
Here's the fundamental problem with pausing new licenses: it treats the symptom while ignoring the disease.
The 103 conditional license holders aren't struggling because there are too many competitors. They're struggling because the regulatory system is designed in a way that makes it nearly impossible for underfunded entrepreneurs to get a business off the ground. The Illinois Department of Agriculture's excessive delays in approving everything from location changes to new construction, combined with rigid enforcement of application plans written before COVID even existed, have created a bottleneck that no amount of "pausing" will unclog.
And while those 103 license holders sit in limbo, the 137 remaining permits are frozen too — which means every entrepreneur who was planning to enter the Illinois market, every investor who had capital ready to deploy, every ancillary business that was counting on new dispensary openings — they're all stuck. The freeze doesn't create opportunity. It freezes it.
Meanwhile, the intoxicating hemp market that the Cannabis Business Association of Illinois has begged legislators to regulate continues to operate freely, selling similar THC products without the same licensing requirements, safety testing, or tax burden. A bill to regulate hemp died in the Illinois legislature in January 2025, and the issue remains unresolved. So licensed operators are playing by the most expensive rules in the country while their unregulated competition plays by none.
What Would Actually Help
Illinois doesn't need a license freeze. It needs a system that actually works for the people it was designed for. That means real capital access for social equity operators — not $240,000 loans for businesses that need $2 million. It means expanding craft grower canopy sizes so small operators can actually compete with MSOs that have 210,000 square feet of growing space. It means cutting through the regulatory red tape at IDOA that keeps licenses sitting inactive for years. It means taking an honest look at a tax structure that pushes consumers to Michigan, to the black market, or to the hemp shop on the corner.
And it means Springfield needs to stop fighting with itself long enough to actually pass something.
Illinois built a cannabis program on the promise of equity and opportunity. What it delivered was a system that favors the already-powerful, punishes the underfunded, and then hits pause when things don't go as planned. The freeze isn't a solution. It's a white flag.
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