Marijuana taxes generate $7.3 million in first month
The first month of legal recreational marijuana sales in Illinois generated more than $7.3 million in marijuana tax revenue for state.
The Illinois Department of Revenue also reported the first month of sales generated $3.1 million more in retail sales taxes. These dollars will be divided between the state and the towns where marijuana purchases were made.
Gov. J.B. Pritzker's recently released 2021 budget estimates the state will collect $28 million in marijuana tax revenue during the remainder of the current fiscal year, which ends June 30. State officials called the revenue estimate "conservative." Next year, the governor's budget team expects $127 million in marijuana tax revenue as more dispensaries open and additional licenses are issued.
Earlier this month, the state reported nearly $40 million in marijuana sales, which included marijuana tax and sales tax figures. Marijuana taxes are generated either through the 7% "cannabis cultivation" tax levied on growers or the staggered 10% to 25% tax on products depending on the level of potency.
Under the law, 35% of marijuana tax revenues will go to the state's general fund; 25% will go to the "restore, reinvest and renew," or R3, program, an effort to reinvest in communities most affected by the criminalization of marijuana; 20% will go to address substance abuse and mental health; 10% will go to pay the state's bills; 8% will be distributed among local governments to support law enforcement; and 2% will fund a public education campaign and data analysis about the effects of legalization.
State officials have been quick to defend the legalization effort against critics by noting the economic development aspect of the tax spending plan.
"Revenue raised in this first month will soon begin flowing back into those communities to begin repairing the damage done by the failed policies of the past and creating new opportunities for those who have been left behind for far too long," said Toi Hutchinson, Pritzker's cannabis control senior adviser.
Later this year, municipal and county taxes will also be applied to marijuana sales.
The state's 45 dispensaries reported 972,045 purchases during January, for an average sale amount of roughly $40. The vast majority of buyers were from Illinois, according to state records.
New licenses will be issued soon to dispensaries allowed in more traditional retail areas. Currently, most of the dispensaries are located in industrial parks and were originally medicinal marijuana dispensaries. In the suburbs, dispensaries operating in Addison, Mundelein and North Aurora offered recreational sales during the first month. Since then, licenses to a dispensary in Rolling Meadows a second one in Addison have been issued as well.
Illinois began allowing recreational marijuana sales Jan. 1, and dispensaries were immediately met with hordes of shoppers, many of whom waited for hours to make a purchase. The first day alone resulted in $3.2 million worth of sales and taxes. Demand for product has been hard for many dispensaries to keep up with and maintain a supply for medical users as well. In fact, many dispensaries stopped selling for at least a day after the first week in an effort to shore up supply and give workers a break.