The opening of the Okay Cannabis shop in Wheeling three years ago seemed like a good business bet. It was the first dispensary in the state to combine sales of marijuana and alcohol with the adjoining West Town Bakery.

Weed, booze and baked goods? It appeared to be a can’t miss.

But sales were not enough to justify its large footprint. Last spring, the store closed and it remains empty.

It’s not the only Illinois marijuana shop to go out of business. A Spark’d dispensary in northwest suburban Crystal Lake also abruptly closed in 2024. And many cannabis business-license holders have yet to open. Only 29 of 86 licensed craft growers are operational, state records show.

For the first time, in a business that was once considered to be like printing money, annual recreational cannabis sales revenue in Illinois declined last year, falling 13%, to $1.5 billion. Medical sales have been declining since 2021. The lower sales reflect falling prices, due mainly to competition from hemp and out-of-state sales.

Former Okay co-investor Scott Weiner, co-founder of the Fifty/50 Group that runs West Town Bakery, said the large companies that got in the business at the beginning dominate the market, with exclusive ownership of medical cannabis dispensaries that don’t have to charge the high taxes that all other stores must charge.

Then the proliferation of hemp stores that don’t pay those taxes or follow expensive regulations further cut into business. Pot became a commodity, with customers going to the closest site with the lowest prices.

“You just can’t fight the big boys,” Weiner said. “For the new social equity guys coming in, sadly there’s no path to success.”

While lower prices are welcome news for consumers, cannabis businesses have had difficulty making money due to high financing and operating costs, and an inability to take normal business tax deductions due to the drug’s illegality under federal law.

That should change with the Trump administration’s promise to reschedule marijuana to a less restrictive designation, which would allow tax deductions. And after inadvertently creating the legal hemp industry in 2018, Congress voted last year to ban intoxicating hemp products effective in November, which should be another benefit to the state-licensed cannabis industry.

The Chicago City Council also approved a hemp ban, but Mayor Brandon Johnson vetoed it Friday, saying it would hurt many Black- and brown-owned small businesses while helping the few big licensed cannabis companies.

Still, the federal changes make some operators more optimistic. Tim O’Hern is chief operating officer of Nature’s Grace and Wellness cannabis company, which bought the Okay Cannabis dispensaries, and has been opening new Bud & Rita’s dispensaries.

“Lower tax rates and the intoxicating hemp ban will really accelerate the regulated cannabis market and provide more opportunities for new operators,” O’Hern said.

But other small operators say the changes will be too little, too late.

“People are going to places that are cheaper to buy their product, whether it’s the hemp shop on the corner, or Michigan,” said Douglas Kelly, executive director of the Cannabis Equity Illinois Coalition. “Banning it (hemp) is not going to solve the problem. All those products are going to go to the black market.”

The coalition urged Illinois to lower its cannabis taxes, which can reach more than 40%, to make the state more competitive. Rescheduling is a half measure that will benefit large pharmaceutical companies getting into the space, Kelly said, when what’s really needed is federal legalization.

While sales revenue is down, the number of cannabis items sold went up last year, to 58 million items, the state reported, reflecting lower prices. The price per ounce of cannabis in Illinois has fallen from an average of more than $400 when recreational sales began in 2020, one of the highest in the country, to about $167.

Currently, scores of conditional licensees are still trying to get funding to open. The industry has generated jobs, with about 9,000 dispensary employees licensed statewide, and nearly 8,000 more in growing operations, according to the state’s annual report.

The state began a new sales tracking system called Metrc in July 2025, which counts discounted prices that may previously have not been included, possibly accounting for some reduction, officials said.

Dispensary taxes were accurately tracked, officials said, generating $438 million for fiscal year 2025.

The Illinois Department of Financial and Professional Regulation, which oversees dispensaries, remains “cautiously hopeful” that reclassifying marijuana will help grow the industry, spokesperson Steve Johnson said.

Onerous requirements for more than 100 security cameras at some businesses, and for around-the-clock security guards, are also killing operators and should be relaxed, since the industry has operated with very few security problems, said Tiffany Chappell Ingram, executive director of the Cannabis Business Association of Illinois.

Lastly, the coming ban on intoxicating hemp will only work to the extent it’s enforced, she said. With thousands of shops nationwide, it remains to be seen who would enforce the ban, and whether there are enough inspectors to do so.