Illinois shops run out of marijuana just six days after start of legalization

Tens of thousands of people lined up outside eight dispensaries in Chicago to buy recreational marijuana during the first week of legal sales, but at the ninth store selling the newly legal drug, there were no lines.

Instead of forcing people to wait in the cold for hours, Dispensary 33 asked eager customers to share a cellphone number, “like when you go to a crowded restaurant and when the table is ready they text you,” Bryan Zises, co-owner of the cannabis shop on Chicago’s North Side, told the Washington Post.

The dispensary texted dozens of people each hour on the first three days of recreational sales, funneling them into the store from opening at 9 a.m. to closing at 9 p.m. But on the fourth day, Zises was forced to turn away recreational customers because his supply of cannabis had been depleted and a new shipment had not yet arrived to restock his store’s shelves.

"We've been trying to get a sustainable approach in a very unknown market," Zises said.

His dispensary stopped selling recreational marijuana on Saturday and Sunday. Sales resumed Monday morning, but the shop ran out within three hours.

“We’re still waiting on cultivator deliveries but will serve as many rec customers [as] we can each day til further notice!” the dispensary tweeted Monday evening.

Standing in line for hours in frigid temperatures, tens of thousands have flocked to the nine dispensaries selling recreational cannabis in Chicago after Illinois' newly legalized cannabis sales began on New Year's Day.

The numbers have been staggering: 55 dispensaries in the state sold more than $3 million in THC-imbued products on day one, matching Oregon's record-setting opening for recreational sales in 2015. By Sunday, Illinois' cannabis customers had bought nearly $11 million worth of recreational marijuana in the first five days, making more than 271,000 purchases.

But the crush of eager buyers strained the state’s marijuana supply, leading many dispensaries in Chicago to turn away customers before the first week of sales ended. Meanwhile, given the state’s restrictive licensing rules, some large cultivators are rushing to keep up with recreational demand in a market previously designed to serve a much smaller number of medical cannabis patients.

Illinois passed legislation in June to legalize the sale and possession of recreational cannabis by January 2020, giving the existing growers -- who served about 87,000 medical marijuana patients before the change -- less than six months to expand their operations to meet the increased demand. The Chicago Tribune reported last year that the state, which was the first to legalize recreational marijuana through legislation instead of a ballot measure, estimated it could have more than 900,000 marijuana users.

Although the 11 states to legalize recreational marijuana sales have struggled to adopt regulations, Illinois' first week of sales has been particularly rough for dispensaries. Colorado and Washington state, the first to allow recreational sales, had much smaller opening weeks in 2012. Oregon and Washington have since struggled with a different supply problem, after hundreds of cultivators created a surplus by growing far more cannabis than consumers can buy and use.

The economics of the cannabis industry are strange. In other industries, if a state produced too much of a commodity, the extra would probably flow to places facing shortages. Marijuana is still illegal under federal law so it can't be sold across state lines. As a result, states that have too much cannabis, like Oregon, can't sell their surplus inventory to those, like Illinois, that have too little.

Demand from recreational users often outpaces medical marijuana use by up to 10 times, economist Beau Whitney told the Chicago Sun-Times. It will probably be months before existing cultivators are able to grow enough cannabis to satiate consumers, even though virtually all the cannabis flower grown in the state is cultivated indoors or in greenhouses and can be harvested throughout the year as it matures, regardless of the season.

Meanwhile, some larger companies that both grow and sell marijuana still have product to put on their shops’ shelves.

“Everybody knew there were going to be supply issues at the beginning, and that was before we saw the crowds that came out,” Jason Erkes, a spokesperson for the cannabis cultivation company Cresco Labs and its Illinois-based dispensary chain, Sunnyside, told the Post. “It’s going to take a little bit of time for everyone to ramp up as they’re expanding their grow facilities.”

Illinois has placed strict limits on the number of licenses for cannabis growers and dispensaries. Existing cultivators were allowed to expand under the new law and already-open medical dispensaries were the first stores allowed to make recreational sales. But the market will continue to improve when the state eventually adds licenses for 100 small growers and 185 new dispensaries in two rounds later this year. Until then, the existing medical growers must expand their operations to meet the demands of the new recreational market.

The chaotic first week of recreational sales has strained dispensaries in other waysl. Thieves burglarized the MOCA Modern Cannabis Dispensary on the city’s northwest side around 3 a.m. Monday and stole cash from the shop. Because federal law bars marijuana sales, banking options are limited for dispensaries and cannabis growers. Most people in the industry do business in cash, making them a magnet for robberies and burglaries.