Cannabis Health Insider

Illinois is one of the states where the use of marijuana is legal. While medicinal marijuana has been legal for around 5 years, the use of recreational marijuana was legalized rather recently. The provincial government legalized recreational marijuana in January 2020.

As of now, the people of Illinois are allowed to have up to 5 cannabis plants at home. However, these are for medicinal purposes only. For recreational use, plants have to be commercially licensed first.

It won’t be wrong to say that this legalization has been a blessing for the economy of the state. In only six months since its legalization, Illinois saw a $239 million worth sale of adult-use cannabis. While the exploding cannabis sale is something to behold in itself, Illinois earned $52 million in tax revenue, extending from January to July. No doubt, it is a milestone for the state nonetheless.

According to some sources Illinois Department of Revenue was able to collect a little over $34.5 million in excise taxes in the same period. That coupled with the $18 million in sales taxes led to a cumulative total just tipping over the $52 million marks.

The fiscal 2020 budget proposed by Gov. Pritzker had a rather humble estimate of $28 million from cannabis sales. However, recent developments in the cannabis demand and supply chain showed almost an 85% increase in the revenue collected.  The main reason behind these booming sales embedding acceptance among the masses. However, cannabis remains an illegal drug federally.

Recently, the state reported sales of over $44 million in just a month of May. While the sales went off the charts and broke all previous records, it didn’t just settle there. The following month, even higher sales of worth more than $47.5 million of adult-use cannabis were reported.

The launch of Sunnyside dispensary in South Beloit was yet another contributor to these sales. The South Beloit dispensary is the largest recreational marijuana dispensary in all of Illinois. The dispensary also brought a lot of investment into the state as well.

Tax Breakdown

The Cannabis Regulation and Tax Act (CRTA) umbrellas all types of taxes on any cannabis sales. Under this act, cannabis has two types of taxes imposed on itself. Firstly, they applied a state-imposed cultivation privilege tax of 7% to all gross receipts by a cultivator to a dispensary. Secondly, they also applied a potency based tax to the product.

A standard 20% tax applies to all cannabis-infused products. However, products containing 35% or less THC concentration have a 10% tax applied to them. Offerings containing more than 35% THC come with a 25% tax tag.

In addition, municipalities can also have a 3% tax cut, if they so wish.

So, where will all the money go?

The IDFPR said that it would deposit $25.9 million into the general fund of the state. This is 72% more than what the fiscal budget managed to foresee. Moreover, one-fourth of these revenues would go to the areas affected the most by ‘war on drugs’.

There’s also an R3 initiative. It means to restore, reinvest, and renew. Under the CRT, 25% of the taxes would go to this initiative. The state can then use these funds in a number of ways.

It looks like the miracles of cannabis legalization are showering upon Illinois. The revenue generated would definitely go a long way in paving the way for the state’s economy. If they distribute the generated revenue with equity, the effects would soon start to bloom.