On May 4, 2019, Governor J.B. Pritzker announced a bill that would legalize recreational cannabis in the state of Illinois. Among other things, the Legislation would allow for possession of up to 30 grams for residents 21 and over, and up to 15 grams for non-residents.
Although the law would take effect Jan. 1, 2020, the first licenses for growers, processors and dispensaries wouldn’t be issued until May or June 2020. Legislators now have just under two weeks to address concerns and pass a final bill before the General Assembly adjourns on May 31.
A legislative hearing on Senate Bill 7 – titled the Cannabis Regulation and Tax Act – was held on Wednesday. The Bill’s sponsor, Sen. Heather Stearns, has stated that there are three themes in support of legalization – public safety, social justice and additional revenue for the state.
Pritzker is counting on a projected $170 million from licensing fees in his proposed state budget for the fiscal year that begins July 1, 2019. In order to realize those revenue projections, fees for cultivation centers and dispensaries would have to be exponentially larger than those in the medical programs, or hundreds of new licenses would have to be granted. The state would impose a $5,000 application fee to obtain a state license. Licenses for growing and selling cannabis range from $10,000 to $40,000, depending on the type of business activity.
Additionally, it is proposed that 10% of the licensing revenue would pay a backlog of unpaid bills, while 25% would go to a new “Restoring Our Communities” fund to be distributed as grants to communities that have suffered because of discriminatory drug policies. There is also a program designed to attract women and people of color to the legal cannabis business.
Taxes on recreational cannabis products would range from 10% to 25%, depending on the type and its THC content. Local governments would get to levy their own sales taxes if they don’t opt out of the program.
Further, in order to right some historic wrongs against minority communities that have long suffered from discriminatory drug policies and enforcement, the measure includes a $20 million low-interest loan program to defray start-up costs for applicants that have lived in a “disproportionately impacted area” or been arrested or convicted of offenses eligible for expungement.
Despite the benefits of legalization, there remain critics. The NAACP, for example, contends that legalization would lead to more addiction and harm minority communities. Law enforcement objects to a provision that would allow people to grow cannabis plants at home.
The recreational law would not change Illinois’ current medical marijuana program, and dispensaries would be required to designate enough supply for medical use. Another critique is that the existing medical dispensaries would be given a stranglehold on the adult-use market since the current licensees would have the ability to double their current operations before new applicants can be licensed.
Nonetheless, with Democrats controlling both the House and Senate, the bill is expected to pass.
- Senior Attorney
Jennifer E. Walker is a Co-leader of Plunkett Cooney's Cannabis Law Industry Group and a member of the firm's Banking, Bankruptcy & Creditors' Rights Practice Group.
Ms. Walker focuses her practice primarily in the areas of cannabis ...
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