Illinois introduces bill for legalized adult-use recreational marijuana, but will it pass?
May 6, 2019

After months of speculation, Governor J.B. Pritzker and allies in the General Assembly introduced a bill over the weekend to legalize adult-use recreational marijuana. The bill, if passed, would represent the first time a state has created a recreational marijuana marketplace through legislation rather than ballot initiative. The proposed legislation focuses heavily on redressing socioeconomic concerns related to the marijuana industry. “Illinois is going to have the most equity-centric law in the nation,” Pritzker said at the Black United Fund of Illinois on Saturday. To that end, the bill would create a low-interest loan program to assist “Qualified Social Equity Applicants” to obtain licenses for transporting, dispensing, or producing “cannabis flower” or “cannabis-infused products,” allow “craft growers” to obtain cultivation licenses, and lead to the expungement of an estimated 800,000 misdemeanor and Class 4 felony marijuana convictions. The bill would also allow Illinois residents over the age of 21 to grow their own marijuana and possess up to 30 grams of the plant.

The bill does not allow for any new large-scale cultivation licenses, which means that the select companies that obtained cultivation licenses through Illinois’s pilot medicinal marijuana program will be the primary suppliers of marijuana for the recreational market. The privilege to operate such cultivation centers will not come cheap. The nonrefundable application fee for the recreational license will be $100,000 and there will also be a nonrefundable Cannabis Business Development fee, which is the lesser of 5% of the cultivation center’s sales between July 2018 to July 2019 and $500,000.  In addition, the cultivator will be required to commit up to $100,000 to one of the Social Equity Inclusion Plans identified in the bill and, along with processors, and will be required to pay a privilege tax of 7% of gross monthly sales. The application fees for dispensaries, processing centers, and transportation licensees are considerably less (and will be subsidized for Qualified Social Equity Applicants), but there are more of those licenses available. In all, Illinois will stand to generate significant revenue from the licensing process.

In addition to the licensing revenue, the state would also be in line to collect a 10% sales tax on cannabis products with less than 35% THC, a 20% sales tax on cannabis-infused products, and a 25% sales tax on cannabis products with more than 35% THC. Municipalities (up to a 3% sales tax) and counties (up to a .5% sales tax in incorporated areas and 3.5% in unincorporated areas) would also be able to tax the sale of marijuana. The bill specifies that the tax revenue will be divided with 35% going to Illinois’s General Fund, 25% to community reinvestment, 20% to mental health and substance abuse treatment, 10% to Illinois’s unpaid bills, 8% to law enforcement training, and 2% to public drug education.

The prospect of legalizing adult-use marijuana in Illinois has widespread support, and the bill is crafted to shore up that support among critical voting blocs. Nevertheless, vigorous opposition is expected. Smart Approaches to Marijuana, a group that opposes legalization, has said that the bill will create an “addiction-for-profit” industry. The limited number of cultivation centers has also raised concerns as to whether there will be an adequate amount of product available for market when the first legal sales start, and the bills limitation on the canopy space per cultivation center could only exacerbate that problem. Others have voiced concerns that the bill would allow marijuana advertising and is just another ill-advised money grab for a state with significant financial issues.

Pritzker hopes to have the bill passed by the end of the current legislative session on May 31, 2019. That means there will be a healthy amount of debate in the coming weeks. Both New Jersey and New York appeared poised to be the first states to pass legislation creating adult-use recreational marijuana markets and both failed to get it done. Whether Illinois is able to accomplish the feat remains to be seen, but we will continue to follow the events in Springfield closely and update the blog accordingly.

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