The first month of legal recreational marijuana sales in Illinois raked in more than $10 million in sales tax.
The Department of Revenue in Illinois said that the legal sales were so strong such that they expect to surpass their original and conservative estimate for the first half year of sales. They are optimistic that they are going to collect more than $28 million from taxes on marijuana sales within the first six months of adult-use marijuana sales. Despite the shortages that plagued the state during the first month of legal sales, the state said that the retailers sold $40 million in cannabis.
According to the state, $7.3 million was collected from weed-specific taxes, while $3.1 million was collected in standard fees, which is also charged on marijuana sales.
During the financial year 2021, which starts on July 1, the state expects to collect $127 million in marijuana taxes. And, it will be the first full year of legal adult-use marijuana sales within the state.
Different types of taxes are imposed on marijuana sales. For example, 10% to 25% is imposed at the retail point of purchase, and this varies depending on the THC concentration in the product. The consumers bear the tax. THC is responsible for inducing the high associated with pot. The state also charges 7% tax on the cultivators at the point of sale to retailers.
During the first month of marijuana sale in Illinois, consumers were paying approximately 27% in combined sales taxes on retail purchases.
The state would also start collecting taxes on behalf of the cities and counties from July 1, and they are allowed to charge a 3% tax on all marijuana sales. According to the Tax Foundation, Illinois’ overall tax rate would place Illinois taxes below Washington, whose overall tax charge is 37% and above Colorado’s 30%.
Half of the tax revenue earned from marijuana sales will be used in communities that were most affected by drug arrests, violence, poverty, and substance abuse, as well as funding mental health treatment. The remaining tax proceeds will be divided between the state’s general revenue fund and local governments.
In comparison, Michigan launched the sale of legal adult-use marijuana on December 1 and the state sold about $6.5 million worth of weed during the first month. The state expects the industry to multiply as more retail outlets are licensed. According to the Michigan Regulatory Agency, the state collected a little over $1 million in sales and excise fees from its first month of sales.
Experts say that the entire cannabis industry, including sector players like Plus Products Inc. (CSE: PLUS) (OTCQX: PLPRF), will be vindicated in their belief that marijuana legalization brings untold economic benefits to states and other jurisdictions where it is permitted.
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