Illinois, the latest state to legalize recreational cannabis, generated over $10 million in tax revenue in their first month of sales and surpassed expectations on how much the move would generate. Original estimates expected the state would collect $28 million in tax revenue before June 30th but, with one of the strongest showings in the history of cannabis legalization, those estimates could wind up being surpassed significantly. Observers note that sales could have been even higher if not for a statewide shortage of cannabis that is expected to last for a year or more.
The Chicago Tribune article linked below explains the process through which Illinois taxes cannabis. Recreational cannabis - but not medical cannabis - is subjected to a "marijuana tax" which varies by product and by THC content. (Illinois was the first state to tax cannabis based on the potency.) "Marijuana-infused products are taxed at 20%. All other marijuana with 35% THC or less is taxed at 10%, and marijuana with THC content higher than 35% is taxed at 25%. Municipalities can levy an additional 3% tax."
The state uses taxes from cannabis products for a variety of reasons, most notably to fund the regulation of the cannabis industry and to invest in areas that have been disproportionately impacted by the war on drugs. Illinois is demonstrating how legal regulated cannabis can help give back to communities through considerable tax revenue.
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