Illinois adult-use cannabis sales have totaled at least $20 million within a few weeks of sales.
For cities and towns in the state, including Peoria, East Peoria, Canton and Springfield, sales at those local dispensaries equate to a new funding tool.
Unanimously, cities have imposed a 3% sales tax on recreational sales in the state, the highest possible percentage under state law. Counties that have made a decision on cannabis taxes also uniformly levy a 3.75% tax on sales made in unincorporated areas, with an additional 3% tax for sales made within a municipality.
They can begin collecting this sales tax money in July, and what these counties and cities will do once this new revenue is less consistent, but only slightly.
Springfield, for instance, will split the revenue partly between funding for city fire and police pensions, and partly between funding for development on the city’s east side.
According to Springfield Office of Budget and Management Director William McCarty, the east side is a part of the city that has “struggled to attract development.”
In Peoria County, board member Brian Elsasser explained that $50,000 has been set aside to fund a position that will be tasked with working through expungements of cannabis crimes, a separate piece of the Cannabis Regulation and Tax Act. He estimates that the position will be in place for at least the next few years.
Once revenue exceeds that clip the excess could go to a combination of places and causes, including law enforcement, addiction treatment and public education.
Elsasser personally hopes to see funds go toward the latter, and that cannabis education could be a part of that additional revenue usage. This is largely due to his concerns about the effects cannabis can have on area youth, he said.
“My concern, as I’ve said before, is the young people,” said Elsasser.
Tazewell County has not yet decided what it would do with the tax revenue, according to county board chair David Zimmerman.
East Peoria and Canton both fall somewhere in between Tazewell County and Peoria County in the decision making process.
While decision makers have floated some ideas, East Peoria Commissioner Mark Hill said nothing is set in stone.
“The current City Council has indicated some of the revenues will be used to offset increased cost of enforcing the new law,” said Hill. “Without any real indication of the amount of sales revenue to be expected the City Council has not made any further commitments for the undetermined revenues.”
Canton Mayor Kent McDowell explained that rather than announcing where the money would go at the risk of having to change course based on actual revenue versus expected revenue, no ideas will become concrete plans until later in the year.
“For the moment the finance chair and I discussed possibly earmarking some of this money, however it is too soon to make any solid decisions,” said McDowell. “We are going to put the money in the general fund for a few months until the sales tax proceeds level off and we have some idea in anticipating what we will be averaging on a monthly or yearly basis.”
Rockford has taken the position not to account for any marijuana revenue in this year’s budget because officials don’t anticipate an accurate estimate of what would come in. City leaders will be tracking the revenue results this year with plans to build that into the following year’s budget.
While shortages in adult-use products, especially of the flower variety, have thrown a wrench into projections, the state has set lofty projections for revenue figures. In a 2019 summary, the state projected that the industry will generate over $57 million in tax revenue and licensing fees for FY2020 and more than double that for 2021.
The state tax revenue will be deposited in the new Cannabis Regulation Fund. According to the summary state agencies responsible for administering the adult use cannabis program will receive resources to cover administrative costs from the taxes collected by the program.
Remaining revenue will then be split a few ways:
35% to the general revenue fund
25% to the Criminal Justice Information Projects Fund to support the R3 program
20% to the Department of Human Services Community Services Fund to address substance abuse and prevention and mental health concerns
10% to the Budget Stabilization Fund to pay the backlog of unpaid bills
8% to 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% to the Drug Treatment Fund to fund public education campaign and to support data collection and analysis of the public health impacts of legalizing the recreational use of cannabis