Illinois license holders across every vertical contend with a complex environment in which heavy taxes, tight advertising restrictions, and ongoing social equity issues make navigating the industry challenging. However, where there are obstacles there are also distinct paths to opportunity, for those who remain flexible, innovative, and well-capitalized.

Strict marketing limitations and advertising restrictions and high taxes present ongoing challenges to operators in Illinois.

Governed by the Cannabis Regulation and Tax Act (CRTA), stringent guidelines have been adopted around the promotion of cannabis products. Regulations prohibit any cannabis ads on broadcast media, billboards, and online platforms. Advertising restrictions also prohibit depiction of consumption, use of the cannabis leaf or flower, medical or health claims, ads designed to appeal to citizens under 21 and restricts advertising at least 1,000 feet from outlets accessible to children (i.e., schools, playgrounds, daycares, parks, libraries, and rec centers). Weed ads are also banned on public transit, shelters, or publicly owned property in the state.

Direct community engagement isn’t just creative – it's necessary.

Despite narrow guardrails, agile cannabis businesses are pivoting to invest in compliant & compelling ways for their community. Companies are focusing on educational events about cannabis providing information on responsible use, product types, and effects (without making any health claims) or engaging community members in local festivals, allowing businesses to build brand awareness and trust without direct advertising.

Companies are also doing co-branding activities across industries to market their products to a broader audience. Some brands are aligning themselves with lifestyle brands outside of cannabis to appeal to their shared target audience such as wellness, sustainability, or artisanal craft clothing brands. Collaborations and sponsorships are another avenue cannabis operators are taking, partnering with local artists, musicians, or businesses for co-branded events to enhance brand visibility compliantly.

Taxes are also a persistent challenge for industry operators. In Illinois, cannabis taxation is structured at both the cultivation and retail levels, with rates varying based on the product type and potency.

First, there’s the Cannabis Cultivation Privilege Tax, a 7% tax imposed on gross receipts from the first sale of adult-use cannabis by a grower, it’s typically passed down the supply chain and reflected in the final price. Next there are two retail-level taxes, Cannabis Purchaser Excise Tax, which is applied at the point of sale, rates depend on the product’s THC content (10% for THC below 35%, 25% tax on products with THC levels above 35%, and a 20% tax on cannabis-infused products, such as edibles; and the Retailers’ Occupation Tax (Sales Tax), which is 6.25% on adult-use cannabis products and 1% on medical products. Lastly (for now), there are the local taxes including the Municipal Cannabis Retailers’ Occupation Tax of 3% and the County Cannabis Retailers’ Occupation Tax of up to 3.75%.

All in, adult-use consumers can expect to pay between 19.55% and 34% in taxes depending on potency and location of their cannabis purchase.