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FACT CHECK: ILLINOIS MARIJUANA REVENUE $600M BELOW POTENTIAL

Illinois Policy Institute | Dylan Sharkey

Gov. J.B. Pritzker is touting how much marijuana revenue Illinois received in 2021. But high taxes and regulatory blunders have kept Illinois weed between $200 million and $600 million shy of its potential.

Gov. J.B. Pritzker is bragging about how marijuana tax revenue for 2021 reached $445 million, but high tax rates are keeping the revenue about 50% below the projected potential.

In 2018 the state said annual marijuana revenue projections ranged from a minimum of $440 million to as much as $676 million.

While the state barely hit the bottom of its own projection, the revenue is even thinner when judged against other states. Of all states with legal marijuana, Illinois brings in the second-lowest revenue per capita.

If Illinois’ cannabis revenue collections matched Colorado or Washington, proportional to the size of their economies and population, it could bring an additional $600 million annually.

Pritzker was happy with the minimum.

“The $1.5 billion in sales of adult-use cannabis in Illinois translates into significant tax revenue with a portion of every dollar spent being reinvested in communities that have suffered for decades,” Pritzker said in a press release.

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But helping communities in need isn’t where most marijuana revenue goes. The state’s main spending account receives 35% of all cannabis revenue – the greatest share of the cash. General revenue funds go to hundreds of places, including Illinois’ worst-in-the-nation pension crisis.

High tax rates and strict regulatory burdens prevent Illinois from tapping the full potential of marijuana tax revenue.
 


On top of taxes, a lack of supply drives up cannabis prices. Illinois is the only state with a hard cap on the number of marijuana-related business licenses. Illinois has 110 active cannabis dispensaries, but regulatory headaches have kept that number low.

Marijuana entrepreneurs were promised 149 additional licenses years ago but a botched lottery system kept them in court. The licenses were finally issued July 22, more than two years after cannabis sales in Illinois started.

As it does with too many businesses, Illinois taxes too much and regulates too much until doing business just about anywhere else is more attractive.

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