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Prairie State Wire

Wednesday, April 1, 2020

Legal cannabis brings boost to Illinois tax revenue for January

State Government

By Hans Oss | Feb 28, 2020

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Legal cannabis sales in Illinois have raised more than $10 million in taxes in January.

Cannabis consumers in the state are assessed an excise tax, which ranges from 10% to 25% depending on the potency of the product, a 6.25% state sales tax, and an additional 3% local tax set to take effect in July in some jurisdictions, including Cook County.

The multiple taxes on recreational cannabis in the state result in a total tax rate as high as 41.25% in some areas, which leads some experts to express concern that excessive taxation will encourage black market activity.

In addition to the potential for a growing black market due to high retail prices, some legislators are also concerned that revenue may not be managed effectively. State Rep. Tim Butler, R-Springfield, opposed legalization in the state partially over concerns about how tax revenue would be spent. He points to waste and abuse uncovered in the $55 million Neighborhood Recovery Initiative as an example of what needs to be avoided.

"We can’t have insider deals," Butler told The Center Square. "We can’t have this money go to waste. This is important tax revenue and it’s a lot of tax revenue coming in the door. That’s one of the reasons this was sold to the people of Illinois, is this was tax revenue going to pay our bills. This isn’t going to pay our bills.”

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