officials cautious in projecting tax revenue from pot sales
Now that recreational marijuana is legal in Illinois, Will County officials still have issues to address in terms of the tax revenue they anticipate coming in from sales.
Hundreds flocked to dispensaries in Joliet and Romeoville starting Jan. 1. Officials from both municipalities said business was orderly during the first few days of the year.
Across the state, more than 77,000 transactions generated nearly $3.2 million in business across the state on Jan. 1 alone, according to Gov. JB Pritzker’s office.
Despite a busy first day of legal recreational marijuana sales, local officials remain cautious in predicting just how much municipalities will benefit from the new industry.
Both Joliet and Romeoville passed a tax of 3% on recreational marijuana sales within their borders. The Will County Board also passed a 3% tax on recreational marijuana sales in incorporated areas in the county.
Toward the end of last year, the city of Joliet projected its take of recreational marijuana revenue at $250,000, significantly less than one initial estimate. Representatives from Green Thumb Industries, the company licensed to sell recreational marijuana in Joliet, at first said they expected about $1 million in tax revenue to be generated for the city.
Interim Joliet City Manager Steve Jones said staff was “a little skeptical about a single entity bringing in” that much money.
In Romeoville, Mayor John Noak said village officials also want to be “really conservative” when projecting tax revenue. The village fiscal year runs through the spring so no official numbers have been generated just yet.
Noak said he realistically thinks recreational marijuana sales could generate between $250,000 and $500,000 in tax revenue for the village. To expect that number to come in closer to $1 million would be “very optimistic,” he added.
“Whatever comes out of it will be a net positive,” Noak said.
Will County Board members also were hesitant to project big numbers in tax revenue.
Board member Kenneth Harris, D-Bolingbrook, who heads the Finance Committee, said there were still a lot of unknowns from the county’s perspective.
“We really don’t know how much money will be generated from this,” Harris said.
Some Republican members were further skeptical of the more conservative estimates from Joliet and Romeoville, even with a busy first week of sales.
“I don’t know if that’s going to hold true for the future or not,” said Minority Leader Mike Fricilone, R-Homer Glen.
Both he and Jim Moustis, R-Frankfort, said the big winner financially from the new recreational marijuana industry will be the state, not local governments.
Through the Cannabis Regulation and Tax Act, the state imposed various fees and taxes on recreational marijuana businesses, including a tax on sales between 10% and 25%, depending on the level of THC in the product.
Last year, the Illinois Department of Revenue projected about $34 million, plus or minus several million dollars, in revenue for fiscal 2020. Along with other fees for applications and licensing, the state expects about $57 million in revenue this year, with even more money coming in the next few years as more licenses are granted and the industry grows.
Moustis also said that any negative effects which come about because of legalized recreational marijuana could also fall disproportionately on the county. County Board members from both parties appear to agree that whatever revenue is generated from local sales should go to entities such as the county health department, sheriff’s office and court system.
Harris said he expects to speak in the coming months with the heads of those departments about what extra costs they’re expecting to incur with legalized marijuana.
The revenue will go to a special fund, although Harris said the money won’t actually start coming in until sometime over the summer. At that point, Harris said it could be easier to estimate how much the county should expect to include for its budget for next year.
As to where that money will go, he expects more conversation on that in the coming weeks.
“We’re going to open up discussion with various board members,” Harris said. “I think we should look at everything.”