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 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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