Collinsville estimates it could get $1 million a year from recreational weed sales
With recreational marijuana sales becoming legal in Illinois on Jan. 1, Collinsville is putting in a tax rate on weed that could bring in between $1 million and $1.3 million a year to the city.
The city council on Monday adopted a 3% tax on cannabis sales generated in the town. Collinsville is one of two communities in the metro-east that have an existing medical marijuana dispensary that will be allowed to sell cannabis for recreational purposes at the start of the new year under the state’s legalization law.
There could be as much as $20 million to $25 million in sales at HCI Alternatives on Eastport Drive, according to city estimates.
A 3% tax on marijuana sales, coupled with the existing sales taxes in Collinsville, could bring in as much as $1 million to $1.3 million in new tax dollars to the city, according to estimates provided by city staff.
State law allows for municipalities to levy a tax of up to 3% on recreational marijuana sales, in addition to existing retail sales taxes already in place.
Collinsville already has the 1% municipal sales tax and a 1.25% home rule sales tax in place. Adding an additional 3% tax on marijuana sales would mean about $1 million to $1.3 million a year being brought into the city coffers.
City staff conceded this is a high projection, but predicated it on HCI’s location which is near to the intersection of Interstate 55/70 and Interstate 255 and the proximity to St. Louis. Recreational marijuana sales are not legal in Missouri.
Chris McCloud, a spokesman for HCI Alternatives, said the dispensary is planning to be open for recreational adult use on Jan. 1. He said the business also is planning a second location for recreational sales only in the metro-east, but is waiting to see which municipalities decide to allow sales before selecting a location.
McCloud said HCI Alternatives estimates the business could generate at least $20 million in recreational weed sales the first year.
Marijuana tax revenue in Collinsville, including the municipal sales tax already in place, would go toward capital improvements such as street and sidewalk repairs, or even capital purchases such as new fire engines or police vehicles, city officials said.
“This also guarantees that should this funding source be changed or be reduced no city services are required to (be) reduced and remain intact,” City Manager Mitch Bair wrote in a memo to council members.
Recreational marijuana use for anyone 21 and older becomes legal in the state of Illinois on Jan. 1. State law initially allows recreational marijuana to be sold at the existing 55 medical marijuana dispensaries, which could also plan to open second locations. Additional dispensaries are planned to be licensed as well.
Many municipalities around the state are deciding whether to allow recreational marijuana sales within their borders, and if so whether to place a local tax on the product and what kind of zoning restrictions to put in place.
The state plans to tax any marijuana with 35% or lower THC at 10% of the purchase price. Anything above 35% THC will be taxed at 25%. A cannabis infused product will be taxed at 20% of the purchase price.
Collinsville does plan to have later discussions of where in town future dispensaries would be able to locate if they want to locate within the municipality and whether to allow marijuana lounges.
Mayor John Miller said he’s not worried taxing at the maximum allowed rate could drive people to buy marijuana on the illicit market.
“I think up in the northern counties of the state, they’re worried about it,” Miller said. “I don’t think down here because there aren’t that many dispensaries and those who want it are going to pay, and if they don’t want to pay, they don’t get it.”
“Since we already have the medicinal marijuana, I think the recreational goes hand in hand,” Miller said. “I don’t necessarily agree with it personally, but I think as a community, it’s going to benefit the citizens of our community. Not the use of it, but the funding (from) it.”
This story was originally published September 23, 2019 at 10:07 PM.
