St. Charles considering 3% tax on recreational marijuana sales

With St. Charles leaning toward allowing up to two recreational cannabis dispensaries in town, aldermen now are considering imposing a tax on marijuana sales.

The government operations committee voted 5-3 Monday to implement a 3% municipal cannabis retailers' occupation tax starting next year. That would tack onto an existing 2% local sales tax, meaning St. Charles would collect 5% of gross recreational marijuana sales, pending city council approval.

Alderman William Turner supported the measure, saying there's no harm in getting an ordinance on the books. Those who voted "no" have previously voiced concerns over allowing cannabis sales in town, and said approving a new tax would be premature.

"I'm continuing my stance to pump the breaks on this," Alderman Rita Payleitner said. "I think we need to take a little time on all of this before we move forward."

A new state law legalizing adult cannabis use takes effect Jan. 1, prompting debates in St. Charles and many other communities over whether to permit or ban sales. Municipalities can't outlaw possession in their towns, but they can regulate the zoning of related retail operations.

Last month, St. Charles aldermen voted 6-3 to begin the process of amending the city code to allow for two dispensaries, as long as they're linked to an established medical marijuana business, among other regulations.

That proposal still has to go through a public hearing, receive recommendations from an advisory commission and committee, and get formal city council approval.

Under the current law, the city can implement a local tax of up to 3% beginning Sept. 1, 2020, Finance Director Chris Minick said.

But the Illinois Municipal League has requested a legislative amendment that would move up that date to coincide with the legalization of possession and sales.

Should that change be implemented, he said, the Illinois Department of Revenue would require a 90-day notice to process the new tax, meaning St. Charles would need to pass an ordinance and have it certified by Oct. 1.

If the timeline is not moved up, the measure would remain on the books for whenever the tax does go into effect.

"This is really no harm, no foul," Turner said. "We'd rather be safe than sorry."

Payleitner and Alderman Ron Silkaitis expressed uneasiness over the state's intentions, saying they have little faith lawmakers will allow local taxes to be applied in January. Alderman Art Lemke said he doesn't think the concept has been thoroughly vetted.

As chairwoman of the committee, Alderman Maureen Lewis did not vote, but she said she would not support the proposal. "Taxing something we don't even have yet seems a little greedy to me," she said.

It's difficult to predict how much money the city could collect from the new tax, Minick said, though marijuana sales data presented at an previous meeting have indicated revenues could exceed $1 million annually.

The city council is expected to vote on the tax later this month.