Illinois hits deadline for cannabis social equity grants as cannabis tax revenue tops $52 million in six months

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

On Tuesday, July 14, Governor of Illinois, J.B. Pritzker, announced that the state has raked in cannabis tax revenue to the amount of $52 million since the start of 2020. Cannabis was legalized for recreational purposes statewide on January 1, with adult-use revenue amounting to $239 million within the first six months of sales rolling out.

Data pertaining to adult-use cannabis sales in Illinois was released by The Illinois Department of Financial and Professional Regulation (IDFPR). The Department revealed that excise taxes amounted to $34.7 million during the first six months of the year, whereas sales taxes totaled $18 million. In total, tax revenue was 85 percent more than what analysts predicted.

The figures which emerged just a month after the state recorded $47.6 million worth of adult-use transactions in June demonstrate significant success for the nascent recreational cannabis market in Illinois, which was anticipated to pull in $28 million within its first six months; based on Gov. Pritzker’s fiscal 2020 budget predictions.

“A portion of every dollar spent will be reinvested in communities that have suffered from decades of disinvestment,” Pritzker said. Under the state’s cannabis law, a maximum of three percent in cannabis taxes can be collected by municipalities.

According to the IDFPR, $25.9 million of the tax revenue will be poured into the state’s general fund, while a chunk of the $18 million sales taxes will be shared among local governments. Under the Illinois Cannabis Regulation and Tax Act (CRTA), 25 percent of taxes will be used to support communities unfairly impacted by harsh drug laws; as part of the Restore, Reinvest and Renew (R3) Program. 

Two types of taxes imposed on cannabis sales in Illinois

As per details of the Illinois Cannabis Regulation and Tax Act (CRTA), two types of taxes are imposed on legal cannabis sales across the state — a seven percent cultivation privilege tax on the gross receipts for adult-use cannabis transactions between growers and dispensaries and a variable potency-based cannabis purchaser excise tax for dispensary sales.

In regards to cannabis purchaser excise taxes, bud that contains 35 percent of the psychoactive compound THC (tetrahydrocannabinol) or less is taxed at 10 percent. Products that have been infused with the plant’s active cannabinoids are taxed at 20 percent, whereas concentrated cannabis products containing more than 35 percent THC are taxed at 25 percent.

The $34.7 million harvested from excise taxes this year is fairly generous, considering the fact that Gov. Pritzker previously estimated that just $22 million would be generated through purchaser excise taxes during the final six months of fiscal 2020. 

“Illinois has done more to put justice and equity at the forefront of this industry than any other state in the nation, and we’re ensuring that communities that have been hurt by the war on drugs have the opportunity to participate,” reads a statement from Pritzker, who feels confident that $100 million in excise taxes and $27 million in cultivation taxes can be pulled in within the next 12 months; as noted in his fiscal 2021 budget.

Time is up for social equity applicants to get involved in Illinois’ cannabis industry

Taxes aside, something else that is being talked about in the cannabis industry news is the fact that the deadline to apply for inclusion in Restore, Reinvest and Renew (R3) the social equity program in Illinois was Monday, July 20. This means that the lucky few who have been selected to receive $31.5 million in grants will need to have already submitted an application — time’s up.

The hundreds of individuals who are awarded social equity grants in Illinois must have come from RG-eligible communities that have been disproportionately affected by gun violence, poverty, the war on drugs or all three. Approximately 300 people are expected to have their application approved by the Illinois Criminal Justice Information Authority (ICJIA), says Lt. Gov. Julianna Stratton.

Cannabis market research firm BDSA estimates that legal cannabis in Illinois will generate $1.5 billion by the year 2025.