As we reported earlier in the week, as of yesterday, Illinois has now joined the ranks of states where recreational marijuana is legal. This was a welcome change for many, as the long line outside the lone dispensary in the metro St. Louis area attested to:

COLLINSVILLE — The long line Wednesday morning outside of HCI Alternatives couldn’t dampen high expectations for Illinois’ new legal recreational marijuana industry.

Nearly 700 people waited in line for the dispensary at 1014 Eastport Plaza Drive to open its doors at 7 a.m. Some had shown up as early as 9 p.m. the night before. The Collinsville medical marijuana shop is the only one in the St. Louis area licensed to sell recreational pot as of Jan. 1.

One thing those who eagerly anticipated the Legalization Era may not have counted on, though, is just how high (no pun intended) the taxes would be. I’m told this is a legit receipt from yesterday from the Chicago area:

A friend shared this (not mine, I swear!). A look at the marijuana taxes in #Illinois and why the black market will be sticking around for awhile. pic.twitter.com/w6Mxn1NBa8

— Ferg (@christoferguson) January 1, 2020

Let’s check that math – $75.85 in taxes on $225.75 in product. That’s just shy of a 34% taxation rate. Now, that isn’t purely a state sales tax (that’s only 6.25%). That’s a whole host of taxes amalgamated. It includes local sales tax, an excise tax, a “Medical Standard Tax,” and then three different levels of “Illinois Recreational Tax,” which vary depending on the potency of the product in question.

This is the actual tax breakdown:

At the retail level, Illinois is taking a unique approach. Rather than a blanket tax for all cannabis products, Illinois will charge a tax rate based on the relative potency of the cannabis and the type of product. The more concentrated THC is, the higher the tax rate:

• 10% tax will apply to cannabis flower or products with less than 35% THC
• 20% tax will apply to products infused with cannabis, such as edible products
• 25% tax will apply to any product with a THC concentration higher than 35%

In addition to these scalable tax rates, the state’s regular 6.25% sales tax rate also applies, along with local taxes of up to 3.5%. The range consumers will pay at the register — which does not include the 7% tax levied at wholesale — will be between 19.55% to 34.75% retail tax, depending on the product’s potency

But don’t fear – all that revenue will be well-spent:

Revenue distribution

After covering the costs of administration and expungement, the remaining funds will be distributed as follows:

• 2% to public education and safety campaigns
• 8% to the Local Government Distributive Fund, for prevention and training for law enforcement
• 25% to the Recover, Reinvest, and Renew (3R) Program
• 20% to mental health services and substance abuse programs
• 10% to pay unpaid bills
• 35% to the General Revenue Fund

So, Illinois will just be raking in that revenue! (Except for the people who decide that the financial costs associated with legal purchases aren’t worth it.)

Wow. That is crushing. That kind of taxation will not only grow (no pun) the black market but you are looking at other massive issues… This is a new kind of prohibition….bootleggers will have nothing on these underground markets.

— Dottie Bailey (@repdottieb4mo) January 2, 2020

So am I reading this right an 8th of flower is $90 tax paid? Are these people insane? Did they look at California and say hold on, we’ll do one better? The price of a pound of pot, of marijuana were traded as a commodity like wheat, would be $150. Let that sink in

— Patrick (@patrick2278t) January 2, 2020

In a year or two, you will see articles & opinion pieces how the legalization was a failure in Illinois. They will blame dispensaries, distribution, quality, etc. NEVER will they blame taxes. Then they will write new laws that will involve even HIGHER taxes. Can't fix stupid…

— Ed Civorep (@civorep) January 2, 2020

And, bear in mind, though the State will be happily collecting taxes on the legal sales, the businesses selling it still aren’t able to access most banking services, as marijuana remains a Schedule I drug under federal law. The U.S. House passed the SAFE Banking Act in September in an effort to address that mismatch but it hasn’t yet been taken up in the Senate. Per the Chicago Tribune:

Thirty-three states have legalized cannabis for medical or recreational use. But the federal prohibition on the drug has made it difficult for businesses in the multibillion-dollar industry to get bank accounts, loans and other financial services.

The bill would allow businesses legitimately operating under state laws to access loans, lines of credit and other banking services, while sheltering financial institutions from prosecution for handling marijuana-linked money.

In the meantime, it will be interesting to observe how this all unfolds in Illinois from the west side of the Mississippi. (Currently in Missouri, medical marijuana is legal, recreational is not.)

What are your thoughts on it? Be sure to let us know in the comments!

h/t to @christoferguson for the receipt photo and the Marijuana Policy Project info