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State collects $10 million in tax revenue during first month of adult use cannabis

The Illinois Department of Revenue announced on Monday that adult-use cannabis sales generated $7.3 million in cannabis tax revenue during the month of January, with an additional $3.1 million generated in retail sales tax revenue. 

Gov. JB Pritzker’s recently released budget estimated the state would collect $28 million in cannabis tax revenue during the remainder of the fiscal year, ending June 30. The January figures suggest the state is on track to surpass that estimate.

Once administrative fees are accounted for, 45 percent of the adult-use cannabis tax revenue will be reinvested in communities disproportionately impacted by the war on drugs and used to fund substance abuse and mental health programs. The $3.1 million in sales tax revenue will be divided between the state’s general revenue fund and the local governments where purchases were made.

“Our goal has been to build the nation’s most socially equitable program that includes new opportunities for the communities most harmed by the failed war on drugs,” said Toi Hutchinson, senior advisor to Gov. Pritzker for cannabis control. “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.”

The state collects cannabis revenue in two ways: a variable excise rate dependent on THC potency and type of product, and a 7 percent cultivators’ excise tax imposed on the sale of cannabis to retailers. Earlier this month, the state announced that over $39 million in adult-use cannabis product was sold at retail stores.

As the industry matures, state officials estimate revenues will grow to $127 million in fiscal year 2021, of which $46 million will go to general funds.

Recreational cannabis use was legalized in Illinois starting Jan. 1.

Cannabis tax rates
Cannabis Cultivation Privilege Tax:

  •  7 percent of the gross receipts from the sale of cannabis by a cultivator or a craft grower to a dispensing organization

Cannabis Purchaser Excise Tax (not imposed on cannabis that is subject to tax under the Compassionate Use of Medical Cannabis Pilot Program Act):

  • 10 percent of the purchase price of cannabis with a THC level at or below 35 percent.
  • 20 percent of the purchase price — all cannabis infused products.
  • 25 percent of the purchase price — cannabis with a THC level above 35 percent.

Allocation of cannabis revenue, minus administrative costs

  • 35 percent for the General Revenue Fund.
  • 25 percent for the Criminal Justice Information Projects Fund to support the R3 program.
  • 20 percent for the Department of Human Services Community Services Fund to address substance abuse and prevention and mental health concerns.
  • 10 percent for the Budget Stabilization Fund to pay the backlog of unpaid bills.
  • 8 percent for the Local Government Distributive Fund to support crime prevention programs; training; and interdiction efforts, including detection, enforcement and prevention efforts relating to the illegal cannabis market and driving under the influence of cannabis.
  • 2 percent for the Drug Treatment Fund to fund public education campaigns and to support data collection and analysis of the public health impacts of legalizing the recreational use of cannabis.

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