Illinois Makes More Money from Cannabis Taxes than It Does from Liquor Taxes

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When Illinois lawmakers approved recreational cannabis in 2019, they did so hoping that it would prove popular enough to generate taxes to help offset state debt and fund a variety of programs. So far, Illinois residents have come through for them in a big way.

Recreational cannabis has proven extremely popular in Illinois. Even with the pandemic resulting in lockdowns for many months in 2020, marijuana taxes raked in $174.8 million for the state.

Since February, cannabis taxes have taken in more for the state than liquor taxes, according to the Illinois Department of Revenue. In February and March, cannabis taxes took in about $56 million, compared to about $39 million in liquor taxes.

As signs of the times go, that’s a significant one. And the same big growth in cannabis tax revenue is being seen across the country.

Illinois already ranks fifth for marijuana tax collections in the U.S.

One of the main reasons people in so many states are enjoying access to legal recreational marijuana is because politicians predict that cannabis taxes can become a significant revenue stream with tremendous upside.

A recent study on the amount of taxes brought in by each state shows that this prediction is correct. Here are the amounts of tax revenue for 2020 in states where adult-use marijuana is legal.

  • California - $1,031,879,926
  • Washington - $468,810,000
  • Colorado - $387,480,1110
  • Oregon - $183,134,448
  • Illinois - $174,884,334
  • Nevada - $123,683,509
  • Massachusetts - $81,734,083
  • Michigan - $31,000,000
  • Alaska - $21,213,296
  • Maine - $1,552,332

Sales are expected to increase across the board in 2021. Also, three states already have approved legal marijuana in 2021, with sales beginning in 2022: New Mexico, New York, and Virginia. Sales in New Jersey may also not start until 2022.

Illinois and other states are putting tax dollars to good use.

How states have used marijuana tax dollars has been another positive touted by legalization advocates and the cannabis industry.

For example, Illinois has put the millions it has collected toward a variety of projects. One of the biggest recipients has been a restorative justice grants program that has already received at least $31.5 million. The money funds programs in civil legal aid, economic development, violence prevention, reentry, and youth development.

About 10 percent of all marijuana tax revenue in Illinois goes toward paying off the huge backlog of unpaid bills the state has racked up during its debt crisis. A third goes into the state’s general revenue fund. About eight percent goes toward law enforcement funding, and two percent funds cannabis public safety programs.

Other states also have a track record of using cannabis taxes for the public good. Colorado, for example, puts about 13 percent of all weed tax funds into funding public schools. Nevada disperses some funds to local governments and to support schools. In Oregon, marijuana tax dollars help fund mental health and drug abuse services and county and local law enforcement and the state police.

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