The Cannabis Regulation and Tax Act, effective Jan. 1, 2020, is a new Illinois law that legalizes recreational marijuana. The Village Board is in the process of collecting information to determine if the Village will allow or prohibit (“opt out”) the local retail sale/on-premises consumption of adult-use cannabis by businesses within Tinley Park.
What is the Cannabis Regulation and Tax Act?
The Cannabis Regulation and Tax Act is a new Illinois law that legalizes recreational marijuana. It will become effective Jan. 1, 2020 and includes the following legal provisions:
- Illinois residents age 21 and older can legally possess as much as 30 grams of cannabis, 500 milligrams of THC-infused products and 5 grams of cannabis concentrate.
- While purchasing marijuana will become legal, it will remain illegal to smoke marijuana in public places or to drive while under the influence.
- Personal cannabis use will be allowed in most private residences, but not in prohibited areas including any public place or in close physical proximity to underage persons.
- Home Grow Cannabis will be limited to authorized medical cannabis participants and is limited to five plants.
Can the consumption/possession of cannabis be banned by a local municipality?
No, municipalities cannot ban or override the CRTA. However, they can enforce related local ordinances consistent with the Act, such as violations for consumption in public places, schools, etc.
What does the law allow municipalities to do?
The CRTA allows Illinois municipalities to choose whether they will allow or prohibit (“opt out”) the local retail sale/on-premises consumption of adult-use cannabis by businesses within their jurisdiction.
If a municipality chooses to opt out, it may adopt and enforce local ordinances to regulate the possession, public consumption, cultivation, growing, processing, dispensing and transporting of adult-use cannabis as long as the regulations and penalties are consistent with the CRTA.
If a municipality permits adult-use cannabis, it may enact zoning ordinances and regulations that designate the time, place, manner and number of cannabis business operations. This would also include requiring minimum distances not only between cannabis business locations, but also between cannabis business locations and certain types of other businesses throughout the municipality. Additionally, municipalities have authority over whether on-premise use is allowed.
In addition, municipalities that opt in may impose a Municipal Purchase Excise Tax on adult-use cannabis products of up to 3% of the purchase price.
At what percentage will the state tax sales?
At retail level, the state will tax sales at:
- 10% for cannabis with THC levels at or less 35%
- 25% for cannabis with THC levels above 35%
- 20% for cannabis infused products such as edibles
The rate of tax cannot exceed 3% of the dispensary's gross receipts from the sale of non-medical cannabis. If imposed, the tax may only be imposed in 0.25% increments.
In addition these scalable tax rates, the state’s regular 6.25% sales tax rate also applies, along with local taxes of up to 3%. The tax will be collected and enforced by the Department of Revenue, which is entitled to retain 1.5% of the amount distributed to each municipality as an administrative fee.