Illinois to become 11th Recreational Cannabis legal state

Illinois budget problems are well known. Gov. J.B. Pritzker has been an advocate for marijuana legalization as a part of a solution to help the state’s finances. The governor had an aggressive agenda and was recently able to broker a bipartisan agreement on the budget and a massive new infrastructure plan which includes a provision to legalize recreational marijuana use in the state.

The passing of this law is also significant in that Illinois becomes the first state to pass a recreational legal law by the legislature alone, i.e. without a vote by the public. It could set a precedent going forward as more and more states consider a “tax-and-regulate” system for recreational marijuana use to help bring in new revenue.

New York and New Jersey have also been actively engaged in trying to pass legalization laws by legislature, but have come up short this year. Arguments in the state governments typically come from HOW the new revenue will be used. Special interest groups are trying to claim money, infrastructure projects need addressing, and a number of reasonable designations are surfacing for the potential new revenue. Ultimately, some common ground will be found and I think the laws will pass within a year in NJ and NY.

One consideration, and “balancing” act, is the decisions on taxes and costs for cannabis businesses in a state. In Illinois, “The bill would also create a system of licensure for those looking to cultivate and dispense marijuana in the marketplace, but not without heavy startup costs. On top of a $100,000 application fee, dispensaries would pay a Cannabis Business Development Fee amounting to the lesser of 5% of the company’s total annual sales or a flat $750,000 – “but at not less than $250,000.” (Illinoispolicy.org)

State legislatures have to balance the taxing and regulation with the existing illegal marijuana market. Many people are willing to pay a premium for a legal product but there is a threshold to consider. The desperate need for revenue could cause states to overshoot and demand too much. Still, there can always be adjustments as it becomes clear what the market will and will not bear. The simple fact is that by passing a recreation legalization law, Illinois is bringing in new money to solve budget problems while adding to the momentum for a federal legalization law.