Illinois is set to achieve its highest tax revenue from adult-use marijuana sales in 2024, despite increased competition from neighboring states that have legalized recreational cannabis since Illinois did on January 1, 2020.
Governor JB Pritzker stated, "We have one of the most orderly, diverse and successful cannabis industries in the entire nation. From Day One, my administration put equity first to build the most accessible cannabis industry in the nation, providing opportunities for communities across the state to create a more prosperous future."
As of November, the state has collected $426.5 million in taxes from legalized marijuana, with December traditionally being a high-selling month. The average tax revenue from marijuana sales in December is projected at $38.9 million.
Despite growing sales, the revenue growth is not keeping pace due to a sliding tax rate based on product potency. It is estimated that marijuana tax revenue will constitute about 27.1% of sales this year, down from nearly 31% in 2021. Some stakeholders express concern that this decline could prompt legislative action to increase tax rates.
Dispensary owners have voiced concerns regarding the sustainability of their businesses. Ambrose Jackson, CEO of The 1937 Group, noted, "It's great to see five years later that there are number of social equity and minority-owned cannabis businesses, but I think the reality is that some of them have been unable to overcome the head start that the initial medical license holders had."
State officials emphasize that social equity investments are fundamental to the legalization process, citing numerous grants and loan programs initiated since 2020. Earlier this year, the Illinois Department of Commerce and Economic Opportunity distributed $5.5 million to 23 qualified, licensed social equity dispensaries.
Pritzker reaffirmed, "We're incredibly proud of the work we've done to build the cannabis industry in Illinois, and we remain fully committed to creating a business environment where people most affected by the 'war on drugs' can thrive." Over 20,000 marijuana-related convictions have been expunged in the past five years, according to state data.
However, Jackson highlighted barriers faced by dispensaries, including restrictions on selling to medical marijuana license holders, which require legislative action. Johnson stated, "Working on medical patients is absolutely one of the things we're committed to."
Legislation is also being pursued to restrict sales of cannabis-like products outside dispensaries, as these pose risks to public safety. Jackson explained, "There's a loophole for smoke shops and vape stores. Many of these smoke shop and vape store owners are selling cannabis products under the guise of hemp." Johnson added that misinformation from the hemp lobby has hindered efforts to close this loophole.
Illinois was among the first states to legalize adult-use marijuana, with over half of U.S. states now following suit. Neighboring states Indiana, Iowa, Kentucky, and Wisconsin remain among the holdouts.