Sales will be taxed at 10% for cannabis with THC levels at or less than 35%; 25% for cannabis with THC levels above 35%; and 20% for cannabis infused products such as edibles. This is in addition to standard state and local sales taxes. Additionally, municipalities may add a special tax of up to 3% and counties may add a special tax up to 3.75% in unincorporated areas.
The municipal cannabis sales tax will be collected and enforced by the Illinois Department of Revenue (IDR), which is entitled to retain 1.5% of the amount distributed to each municipality as an administrative fee.
While the Act presently would allow for the tax to be effective not sooner than September 1, 2020, the Illinois Municipal League (IML) recommends that municipalities consider adopting the tax ordinance imposing the tax effective on January 1, 2020, and certify the ordinance to the IDR by October 1, 2019, in anticipation of a legislative amendment to the Act that may authorize the local tax as of January 1, 2020.
Additional taxes will be collected by other government bodies including a cultivation privilege tax, cannabis purchaser excise tax, cannabis county retailers’ occupation tax. State tax revenue will be placed in the Cannabis Regulation Fund. The Department of Revenue projects that this industry will generate over $57 million in tax revenue and licensing fees in FY20.