Pot taxes in Chicago could be as high as 41% by July as county moves forward with 3% levy

A 3% tax on cannabis retailers was approved by a Cook County panel Wednesday and is expected to be approved by the full Board of Commissioners Thursday — meaning taxes on some pot products in Chicago could exceed 41% by the summer.

The county proposed the Cannabis Retailers’ Occupation Tax on recreational cannabis in December. It would be imposed on “all persons engaged in the business of selling cannabis.”

That 3% would be in addition to the city’s 3% planned tax and state excise taxes of 10-25%, based on the level of THC, the ingredient in pot that gets users high, in the product purchased. Marijuana products also carry normal sales taxes — which in Chicago are 10.25% — meaning some products could carry taxes of 41.25% starting this summer.

The 3% figure is the highest the county can tax, according to state law. The county wouldn’t be able to start collecting revenue from drug sales until July.

While the total taxes are high, they are less than what’s charged to buy a pack of cigarettes in Chicago. Federal, state and local taxes are more than $8 on a pack of cigarettes, which can cost $14-16 in the city.

Commissioner Larry Suffredin, D-Evanston, said the tax is needed because pot legalization will lead to increased health and policing costs.

In other states where marijuana legalization has gone into effect, he said, there have been “increases in emergency room and medical treatments because of interactions between the marijuana products and other drugs.” There’s also been an increase in “the number of DUIs and the requirement of police authorities, like our sheriff’s office, to come up with unique methodologies to be able to register how impaired individuals are who are driving under the effects of marijuana,” Suffredin said.

“Those two issues will have an impact on the county’s budget in the future,” he said. “This is a reasonable taxation to protect our citizens from further taxation necessary to cover both the medical cost of the program and the court cost.”

Commissioner Sean Morrison, R-Palos Park, voted present on the matter because he’s “not big on taxes that go above and beyond what our normal sales tax is.” Commissioners Stanley Moore, D-Chicago, and Peter Silvestri, R-Elmwood Park, also voted present.

The county isn’t expecting much revenue from the tax — projections currently show that amount to be around $850,000 for the last six months of 2020, said Ammar Rizki, the county’s chief financial officer. That money will likely go into the county’s public safety fund as well as the general fund, Rizki said.

The county’s other cannabis-related measures, including ordinances creating a cannabis commission to study legalization’s impact on the county and a zoning ordinance governing pot-related retailers opening in unincorporated Cook, also passed out of the Legislation and Intergovernmental Relations Committee and the Zoning and Building Committee respectively.

The tax, as well as the commission and zoning ordinance, are slated for approval of the county’s Board of Commissioners Thursday.