Uh-Oh! Illinois Marijuana Tax Money Starts Slipping

“There’s a first time for everything.” “It was bound to happen eventually.” There are plenty of go to sayings to blunt (pun perhaps intended) the drop of marijuana sales revenue for the first time in the five years it’s been legal in Illinois.

Remember when legalizing marijuana was the financial answer for all the state’s woes? Majiuana wasn’t the budget tool that the Thompson center used to be, but marijuana tax revenue was certainly a carrot dangled by those who understood that the state had spent far beyond it’s means and needed an infusion of revenue to offset the Springfield spending and future promised spending.

The voters in Illinois overwhelmingly approved of medicinal and then recreational marijuana sales within the state to create new money for the budget.  It would (at least at first) draw the curious to border communities to sample the legal weed offerings. The money followed.

But with neighboring states following Illinois’ Midwest puff-puff legal pass lead, the draw from other states will naturally decline. There’s also the inquisitive Illinois partaker who wants to know what those states are offering. That then becomes a negative as recreational users sample out of state marijuana.

The discretionary income spent doesn’t increase for those individuals, it just goes to a different state. Then you have to factor in each states pricing models. In Illinois the state approved legal marijuana is priced at a level that has kept the neighborhood “connection” from going out of business.

These are basic market forces at work. Can government figure it out? Government doesn’t comport itself as private business does. Can Illinois government get out of its own way and find a strategy to become a dominant market draw from neighboring states? Or—ultimately curtail spending??…(giggles…) Sorry. That would be the last thing learned. The first option will probably be to increase the taxes on Illinois state marijuana sales.

Maybe this is just a hiccup (or cough--), or maybe Illinois can’t hold its smoke.