Reefer revenue reaches $175M for first year

State takes in record monthly high of $25M in taxes for recreational cannabis in December — and holds it

Recreational marijuana is a cash crop in Illinois, producing $175.1 million in tax revenue just from the first calendar year. (Shutterstock)

By Ted Cox

Illinois took in $175.1 million in tax revenue from the first calendar year of marijuana legalization — and held it for as long as possible.

The Illinois Department of Revenue reported that tax collections from recreational cannabis set another in a series of records in December, with $25 million added to state coffers. Legal weed has been approaching the same level as liquor taxes, and it closed to within just over $1.1 million of state liquor tax revenue, which produced $26.1 million for the month.

Tax collections typically lag a month behind sales — for instance, the state collected just $200,000 in revenue from sales in the first month of legalization last January — so the first full year produced just 11 months of robust revenue, but adding another month like December would translate to $200 million, and sales have been on a steady month-to-month increase.

Revenues leveled out in September and October, but resumed a record rise in November and December.

On the campaign trail, Gov. Pritzker once estimated adult-use cannabis would produce $700 million a year, and if he meant sales he was pretty close, as the Illinois Department of Financial and Professional Regulation released figures last week finding that state dispensaries did almost $670 million in business the first calendar year, finishing with $87 million just last month. If the governor meant tax revenue he was a little high, but $25 million a month translates to $300 million a year, and with more dispensaries set to open in the months and years ahead the $700 million figure would appear to be far-fetched but not utterly out of the question.

In any case, recreational reefer was one of the few bright spots in state tax revenue in the pandemic. Revenues from the motor fuel tax dropped from $212.6 million in November to $182.6 million in December, suggesting many people did stay home and not travel for the holidays this year. A year ago, the motor fuel tax produced $215.4 million in December. But the hotel tax is where state coffers really took a beating, producing just $7.5 million last month compared with $35.7 million in December 2019.