Illinois and Michigan: Stunning Comparison of Newest Cannabis-Legal States

The two most recent U.S. states to legalize recreational cannabis use are Michigan and Illinois.

The two states are practically neighbors, with comparable populations (Illinois: 12.75 million, Michigan 10 million). But when it comes to cannabis, any comparison ends here.

Cannabis legalization in Michigan came via voter ballot, meaning the state was a reluctant partner in legalization. It shows.

The state government avoided one of the primary mistakes of cannabis-legal states: over-taxing the legal cannabis industry. Michigan’s taxes on cannabis are a reasonable 10% excise tax along with the state’s 6% sales tax.

However, Michigan’s local governments have made the same mistake that is crippling the legal cannabis industry in several cannabis-legal states (notably California). Roughly 80% of local governments in Michigan – including Detroit – have outlawed legal cannabis sales.

The Seed Investor has addressed this insanity previously.

These local governments aren’t “banning cannabis” (as they mistakenly believe). The cannabis black market is alive-and-well in every city and county in the United States.

These short-sighted, narrow-minded governments are only forcing their own residents to purchase their cannabis from the black market. It is this mentality that is responsible for (among other things) 50+ U.S. deaths and 2,000+ serious illnesses from tainted black market vaping products.

Meanwhile, legalizing cannabis has produced only positive benefits for U.S. cities. Such local bans on legal cannabis are inexcusable.

Crippled by short-sighted local governments, Michigan’s legal cannabis industry has generated a mere $8.24 million in sales over the first 5 weeks of full legalization, commencing December 1, 2019.

Then there is Illinois.

Illinois was the first state government to legalize cannabis via its own initiative – no arm-twisting by voter ballot required. But the State deserves much more credit.

Illinois has enacted the most progressive cannabis reform laws. In addition to legalization, Illinois is at the vanguard in including social equity provisions in its new laws.

From Day 1, Governor J.B. Pritzker’s Democrat government has been unequivocally enthusiastic about cannabis legalization. The Governor added an exclamation to this with a mass-pardon of over 11,000 previous convictions for cannabis possession.

This strong leadership at the state level has carried over to the local level of government. While 80% of Michigan’s local governments are initially blocking legalization (not unlike several other states), roughly 60% of Illinois’ local governments are allowing legal cannabis sales.

Energized by this enlightened approach at the political level, the legal cannabis industry in Illinois has hit the ground running.

Legalization took effect on January 1st in Illinois and in just the first five days, Illinois has racked up nearly $11 million in sales. It would have been a lot more, but lack of supply has forced nearly all Illinois cannabis retailers to restrict quantities for purchasers.

Michigan, first five weeks: $8.24 million.
Illinois, first five days: $10.83 million.

Even adjusting for the difference in population between the two states, Illinois’ legal cannabis industry is selling more in a day than Michigan sells in a week. And just wait until supply catches up with demand.

As noted in a recent Seed Investor article, Illinois has produced “a recipe for success” with respect to the progressive manner in which it has fully legalized cannabis. Barring missteps, the State will likely eclipse even Colorado as the most successful U.S. jurisdiction in legalizing cannabis.

That previous Seed Investor article also drew attention to some of the publicly listed cannabis companies that are best-positioned to capitalize on this recipe for cannabis success.

When other U.S. states have implemented legalization, the politicians always say that helping the legal industry to phase-out the cannabis black market is one of their top priorities. But the lukewarm support for (or sometimes outright sabotage of) the legal cannabis industry belie those words.

When it comes to cannabis legalization, the government of Illinois has done much more than just “talk the talk.” It has walked the walk.

Everybody wins.

The State took in over $300,000 in cannabis taxes on just the first day of legalization (while also taxing legal cannabis at a moderate rate).

The People win in two ways. They obtain broad access to (safe and inspected) legal cannabis products. And they also participate in all these tax revenues and job creation from a flourishing legal cannabis industry.

With nearly $11 million in revenues in just five days, legal cannabis companies (and their shareholders) are also winners.

Two more U.S. state have fully legalized cannabis. Look what happens when one of them gets it just right.