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The appraisal of cannabis dispensaries is an issue of supply and demand. As of June 2022, there were only 110 recreational dispensaries operating in Illinois. Chicago has 19 dispensaries and the surrounding suburbs have more than 40. The issuance of 185 new cannabis licenses by the Illinois Department of Professional Regulations can now proceed after litigation from the lottery system to get licenses.
Of the 110 dispensaries that are open, seven companies own 60 of them. More licenses should help to open-up the market and increase competition.
The State of Illinois has, in some respect, sets itself up for failure. They expound on the goal to let the little guy and those who were victims of drug laws in the past have an opportunity to get some licenses. The problem is that this is a massively regulated industry and dispensaries can easily cost in the $1,000,000 to $1,500,000 value range to put up. Not many “little guys” or not-for-profits have that type of cash.
Regardless, more licenses should help drive down costs and help the consumer. We have valued a couple of dispensaries in the past few months and the appraisal issues for this property class are both complex and rather fascinating.
