Chicago is expected to benefit from only $3.5 million in tax revenues from recreational marijuana next year due to state legislation preventing municipalities from collecting taxes until next September, according to Mayor Lori Lightfoot’s proposed $11.65 billion city budget.
During the last quarter of 2020, a local 3 percent excise tax on pot sales would generate $1 million and the remaining $2.5 million would come from increased sales tax revenue, she said Thursday. Lightfoot has estimated recreational marijuana will eventually bring in $10 million in tax revenues a year for Chicago, and that projection was in line with her budgeted figures. Lightfoot needs to close a $838 million budget gap.
Eleven medical marijuana dispensaries already operate in Chicago, and recreational sales are slated to begin on Jan. 1, though it’s unclear how many stores will ultimately open.
Lightfoot had pushed hard for a marijuana exclusionary zone spanning much of the downtown, but has received significant pushback from aldermen. Ald. Brendan Reilly (42nd), who spoke out against Lightfoot’s proposal, estimated that marijuana tax revenue could bring in $25 million a year if it were permitted in Lightfoot’s so-called exclusionary zone.
Marijuana-related revenue wasn’t included in a $6.2 billion budget proposed earlier this month by Cook County board president Toni Preckwinkle or in Gov. J.B. Pritzker’s $40 billion budget from four months ago.
Marijuana products containing less than 35 percent THC will also be taxed at a 10 percent rate on the state level and those with more THC will be taxed at a 25 percent rate. Cannabis-infused products will be taxed at a 20 percent rate.
The state law’s Democratic sponsors have estimated recreational marijuana sales will create only $56 million in new taxes for the first year of sales, the Associated Press reported.
A study commissioned earlier this year by those sponsors determined the state’s recreational marijuana market could generate between $440 million to $676 million in annual tax revenue. Another study estimates the state’s legal marijuana industry could employ 65,000 people by 2025.
[Sun-Times] — Brianna Kelly