The Crusader Newspaper Group

High costs and regulations make starting cannabis business difficult as Illinois cashes in

With sales now up to $1.5 billion annually, Illinois has taken in record tax revenue from cannabis sales over the past year. However, one expert says the state still makes it difficult to operate a business due to high costs and regulations.

Illinois has seen a 50% increase in total tax revenue reported from cannabis, from $297.7 million in 2021 to $445.3 million in 2022.

Pam Althoff, executive director for the Cannabis Business Association of Illinois, said that Illinois has some of the strictest regulations in the nation regarding cannabis, making it a struggle to break into the business.

“I believe our licensing program in Illinois is one of the most rigid in the nation,” Althoff told The Center Square. “So having access to receiving a license is a lot tighter here in Illinois.”

A craft grower contract with the state could cost the grower nearly $125,000 just to apply. Althoff said this is a major part of why it has been so difficult.

“The regulations we have in place make it difficult for a normal person to access the industry,” Althoff said. “It is the cost, most people do not have access to that much money, and you cannot just go to a bank for a loan.”

Althoff was asked if the state should consider a free market approach to regulating the industry.

“I do not think the free market is the way to go when one of your goals was to obtain more diversity,” Althoff said.

Taxes on legal cannabis can be up to 40% or more, depending on the potency of the product. The taxes are split several ways. More than a third goes to the state’s general revenue fund. Ten percent goes to unpaid bills. Eight percent goes to law enforcement and 2% goes to public safety campaigns.

Nearly a quarter of every cannabis tax dollar goes to community groups in areas hardest hit by the war on drugs.

State Rep. Sonya Harper, D-Chicago, said the state would use this money to benefit the community.

“With this 50% increase in total tax reported from adult-use cannabis, I am hopeful that investments can be seen and felt by residents who live in these communities immediately and going forward,” Harper said.

This article originally appeared on The Center Square.


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