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Illinois is poised to see its best year yet for tax revenue from adult-use marijuana sales in 2024.
That’s despite growing competition from neighboring states that have legalized recreational use in the five years since Illinois first did on Jan. 1, 2020.
“We have one of the most orderly, diverse and successful cannabis industries in the entire nation,” Gov. JB Pritzker said. “From Day One, my administration put equity first to build the most accessible cannabis industry in the nation, providing opportunities for communities across the state to create a more prosperous future.”
Through November, the state has received $426.5 million in taxes from legalized marijuana sources this year, according to Illinois Department of Revenue figures.
On average, the state has generated $38.9 million in marijuana tax revenue in December. But state officials note December traditionally is a high-selling month, which could result in higher-than-average tax revenues.
“Our market is still growing,” the state’s Cannabis Regulation Oversight Officer Erin Johnson said. “November saw more than $149 million in sales, the second-highest month on record.”
But while sales are growing, the revenues they produce are not necessarily keeping pace. Because of the state’s sliding tax rate that is based on the potency of the product, it’s estimated Illinois’ marijuana tax revenue will be about 27.1% of sales this year. That’s down from nearly 31% in 2021. Some worry that dip could result in the legislature increasing tax rates.
Additionally, some dispensary owners complain the state is not doing enough to ensure their long-term viability.
“It’s great to see five years later that there are number of social equity and minority-owned cannabis businesses, but I think the reality is that some of them have been unable to overcome the head start that the initial medical license holders had,” said Ambrose Jackson, CEO of The 1937 Group, which has dispensaries in Fox Lake, Forest Park and Tilton. “As a result, what we’re starting to see now is consolidation within the market. And we have to be careful about it resulting in pushing out those minority and social equity operators.”
November saw the second-highest sales at marijuana dispensaries like Parkway Dispensary in Fox Lake since the start of legalization in Illinois five years ago, according to state records.
John Starks/jstarks@dailyherald.com
State officials contend social equity investments are a cornerstone of the legalization process. They point to numerous grants and loan programs initiated since the outset of legalization in 2020.
Earlier this year, the Illinois Department of Commerce and Economic Opportunity distributed $5.5 million in $240,000 increments to “23 qualified, licensed social equity dispensaries.” That’s in addition to $22 million awarded to craft growers, infusers and transporters in the early stages of legalization.
“We’re incredibly proud of the work we’ve done to build the cannabis industry in Illinois, and we remain fully committed to creating a business environment where people most affected by the ‘war on drugs’ can thrive,” Pritzker said.
According to Illinois Prisoner Review Board data, more than 20,000 marijuana-related convictions have been expunged in the past five years, as well.
“And we do know that arrests have generally decreased,” Johnson said.
State officials acknowledge the COVID-19 pandemic that began three months into legalization in Illinois threw a wrench in the state’s ability to help jump-start social equity programs within the industry.
Of the 242 dispensaries statewide, 132 were social equity applicants, state officials said.
But Jackson notes not all dispensaries can sell to medical marijuana license holders, a barrier that requires a legislative fix.
“Working on medical patients is absolutely one of the things we’re committed to,” Johnson said. “We hope that legislation will move in lame duck session, but if not, we’ll move it again in the spring.”
Additional legislation restricting sales of cannabis-like products outside of dispensaries also is being pursued. Jackson said these items threaten dispensaries and public safety.
“There’s a loophole for smoke shops and vape stores,” he explained. “Many of these smoke shop and vape store owners are selling cannabis products under the guise of hemp.”
Johnson said “some misinformation by the hemp lobby” has slowed efforts to close the loophole.
“It harms not only cannabis industry but, most importantly, it’s poisoning the people in the state of Illinois,” she said.
Illinois was one of the first states in the nation to legalize adult-use marijuana. Now more than half the states have made it fully legal. Neighboring states Indiana, Iowa, Kentucky and Wisconsin are among the remaining holdouts.
“}]] [[{“value”:”Illinois is poised to see its best year yet for tax revenue from adult-use marijuana sales in 2024.
That’s despite growing competition from neighboring states that have legalized recreational use in…”}]] Read More
