Illinois is Going to Tax Recreational Marijuana Based on THC Content

Extract enthusiasts draw the short straw in Illinois.

Illinois recently made cannabis history. And not only because it became the newest state in the nation to legalize adult-use cannabis. The specific ways in which Illinois achieved legalization, as well as some key features of its new laws, have set it apart from other weed-legal states.

For starters, Illinois is the first state to pass legalization entirely through the legislative process. Technically, Vermont lawmakers legalized possession of marijuana this way, but they have yet to establish any sort of retail program. But Illinois, on the other hand, managed to pass legalization and establish a retail framework, which is set to go into effect on January 1, 2020.

Additionally, Illinois is also attracting attention for its unique tax structure. Specifically, when weed sales go into effect, the state will levy taxes based on THC content, instead of weight the way other weed-legal states do.

Illinois’ THC-Based Tax Structure

Here’s how Illinois will tax recreational cannabis and cannabis products:

  • Flower or other marijuana products with less than 35 percent THC will have a 10 percent sales tax.
  • Marijuana flower and other products with more than 35 percent THC will see a 25 percent sales tax.
  • And cannabis-infused products like edibles and drinkables will have a 20 percent sales tax.
  • Additionally, the state will impose a seven percent gross receipts tax on weed sales between cultivators and retail dispensaries.

In many ways, this is a novel idea in the world of marijuana legalization. The only other similar tax structure is in Canada. Last year, weed became legal at the national level. Under the country’s new rules and regulations, cannabis edibles, cannabis extracts, cannabis oils, and cannabis topicals all face excise taxes based on how much THC they contain.

But in the U.S., Illinois is the first state to attempt this type of tax structure on the sale of legal cannabis.

Will This Affect Medical Marijuana?

For many, especially those who are currently medical marijuana patients, this new structure raises some big questions. Namely, will the three-tiered tax structure make medical marijuana—which can sometimes be relatively potent—more expensive?

According to local news source WTTW, Illinois’ new THC-based tax scheme only relates to recreational sales.

Even after retail sales begin next year, medical marijuana sales will proceed as usual. And when it comes to taxes, WTTW reported that medical marijuana products will continue to see a one percent sales tax, which is reportedly the same sales tax applied to all pharmaceuticals in the state.

Illinois’ medical marijuana program has so far seen relatively strong success since it launched in 2014.

Today, there are reportedly more than 65,500 medical marijuana patients registered with the state’s program. Additionally, sales of medical marijuana in Illinois recently went above $323 million.

Illinois’ medical marijuana program serves patients with one of 41 qualifying health conditions.Along with keeping medical marijuana separate from recreational cannabis in the context of sales taxes, the state has also kept the two separate in other key ways.

This includes keeping medical marijuana free of the same potency limits as products intended for the recreational market.

Home growing is the other big allowance granted to medical patients but not recreational consumers. As currently written, the state’s new recreational laws will not allow for home cultivation. But as per Illinois Policy, registered medical marijuana patients can still grow up to five plants at a time.

Lindsey, ByNick. “Illinois Is Going to Tax Recreational Marijuana Based on THC Content.” Green Rush Daily, 10 July 2019, greenrushdaily.com/politics/illinois-is-going-to-tax-recreational-marijuana-based-on-thc-content/.

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