Trickle-Down Weed Taxes in Illinois
Good morning everyone, this perspective springs from a headline found in The Chicago Sun Times:
One thing I’ve been reminded of on a daily basis attending the State of Cannabis News Hour is the many ways that BIG NUMBERS are only GOOD NEWS for a SMALL NUMBER OF PEOPLE.
So when we look at Illinois’ cannabis sales – more than $1.9 Billion since legalizing in 2020, generating nearly $563 Million in tax revenues - I want to know where THAT money is going.
According to this story, "… the bulk of the state’s weed windfall, $319 million, comes from an excise tax of up to 25% per purchase, depending on the product…"
You see what they did there? Illinois took $250 Million off the top of weed taxes. They call it sales tax and it goes into the government machine. (Poof!)
Now we’re down from $563 to $319 M … "That funding, which includes $30 million in fees paid by marijuana businesses, makes up the state’s Cannabis Regulation Fund…"
THE DEEP DIVE
BY THE NUMBERS:
$104 M goes to the General Fund – (Poof!)
$74.5 M to Restore, Reinvest and Renew Program, (I’ll come back to that)
$59.6 M to Substance Abuse Prevention and Mental Health
$48 M back to local governments and Administrative expenditures (Poof!)
$30 M to Budget Stabilization Fund, aka the Rainy Day Fund, aka (Poof!)
$7.4 M to expungement and
$6M to Public Health Campaign
Here's a quick look at two of these:
1. $74.5 Million to Restore, Reinvest and Renew Program, aka “R3”
From the R3 website: "R3 is a GRANT PROGRAM in communities that have been harmed by violence, excessive incarceration, and economic disinvestment. R3 grants fund programs in five areas:
Civil Legal Aid
And $31 M was already paid out from taxes collected in 2020. So that program seems to be functioning according to plan.
2. On the other hand, we have a paltry sum of $7.4 Million dedicated to EXPUNGEMENT OF CANNABIS RECORDS:
To be fair, 12 months ago, Governor Pritzker announced he had expunged nearly 500,000 cannabis arrest records. That's a big juicy number and kudos to Illinois for that, and also to New York which has expunged 501,000 records, and much-smaller New Jersey which has expunged 360,000...
But more importantly: shortly after legalization was signed in 2019, the Illinois Sentencing Policy Advisory Council estimated at least 572,000 minor cannabis offenses would be automatically expunged. AND, another 119,000 could either be pardoned by petition or go through an expungement process.
So, for all his bravado, Pritzker is 191,000 short on expungement...
THE LOOP BACK
Why am I going on about expungement?
In addition to giving people back a measure of control over their own lives, a study by Stanford University shows that: "The estimated benefits of expungement outweigh costs by about $5,800 per person in one year. This includes increased income, increased tax revenues and reductions in government assistance."
Multiply $5,800 by the 191,000 waiting for expungement and Pritzker could create $1.1 Billion in benefits.
That's more that 3 times the amount of cannabis excise taxes… if he’d just get the job done!