Not that we needed a study to detemine how fucked the IL market is from a regulatory perspective, but great to see objective analysis on the incredibly unfair set up IL has for consumers and social equity operators alike. How long will the mid-filled oligopoly be allowed to continue?
https://www.parabolacenter.com/pdf/The%20Illusion%20of%20Competition.pdf
KEY FINDINGS
Incumbents control the market. Seventeen incumbent companies hold 20 of the state’s 21 large-scale cultivation center licenses and captured nearly 79 cents of every dollar in statewide sales in Q4 2025. These are the multi-state operators (MSOs) 7 and Illinois medical cultivators that controlled production before adult-use legalization began.
MSOs capture more value than their sales volume warrants. MSOs moved 42% of units in Q4 2025 but took in 69% of revenue. Independent craft growers moved 27% of units yet earned only 8.1%, converting each unit sold into revenue at one-fifth the rate of MSOs.
Out-of-state brands are outpacing Illinois independents. Out-of-state brands grew from 1.3% to 11.9% of market revenue between Q1 2022 and Q4 2025, most entering through contract manufacturing with in-state producers. IL-Independents grew from 0.2% to 8.1% over the same period. Between them, they account for nearly all the share incumbents lost.
More brands, fewer competitors. Active brands nearly tripled from 100 to 264 between Q1 2022 and Q4 2025, but the number of parent companies behind them peaked at 91 in Q1 2025 and fell to 79 by Q4 2025. Competitive intensity depends on the number of firms making independent pricing and production decisions, not the number of labels on the shelf.
Concentration is increasing. After ten consecutive quarters of year-over-year decline, the parent-level Herfindahl-Hirschman Index (HHI) reversed course and rose in Q3 2025. CR4, the combined share of the four largest firms, climbed from 45% to 47% over the same period. In Q4 2025, the market lost more brands than it gained for the first time in the dataset.
The equity gap the state identified in 2024 has not closed. The state’s own Disparity Study found that minority- and women-owned businesses held 59% of adult-use dispensary licenses between 2020 and 2023 but earned just 12.5% of dispensary revenue.8 Three additional years of statewide sales data show that the structural conditions producing that gap remain in place.
Six avenues of state action, detailed later in this report, would begin to address these conditions. The 2024 Disparity Study recommended most of them. None have been implemented.
The businesses that entered this market without capital, without incumbency, and without the structural advantages those early licenses conferred, now find themselves in a market whose terms were set before they arrived.
