A new report finds that the State of Illinois could generate over $500 million in new tax revenues from legalizing recreational marijuana.
One policy change that has been proposed to generate additional tax revenues in Illinois is to legalize, regulate, and tax recreational marijuana. Fol+lowing a 736-day budget impasse from the summer of 2015 to the summer of 2017, Illinois still has a $8 billion backlog of unpaid bills and $130 billion in unfunded pension liabilities. While legalizing and taxing marijuana will not fix all of Illinois fiscal woes, moving marijuana users from the black market to a legal, regulated market that is taxed could still help Illinois’ funding deficit.
There is significant public support for legalizing recreational marijuana in Illinois: 66 percent support legalizing marijuana, including a bi-partisan majority of Democrats and Republicans. Furthermore, 10 states and the District of Columbia have already legalized recreational marijuana.
A new report, conducted jointly by the Illinois Economic Policy Institute (ILEPI) and Project for Middle Class Renewal (PMCR) at the University of Illinois, finds that high taxpayer costs for law enforcement and cannabis-related incarceration would be reduced by legalizing recreational marijuana. In total, Illinois taxpayers would save $18.4 million annually in reduced incarceration costs, law enforcement spending, and legal fees from marijuana legalization. This revenue could be redirected to solve other crimes– such as homicides, robberies, and assaults.
The economy would also grow. Legalizing marijuana would:
- generate $525 million in new tax revenues, including $505 million for the state and $20 million for local governments– a move that credit rating agencies have called “credit positive;”
- create over 23,600 new jobs at more than 2,600 businesses in Illinois;
- boost the Illinois economy by $1 billion annually;
- allow the state to make additional pension payments and vital public investments in infrastructure, K-12 public school, college tuition assistance programs, and drug treatment and prevention programs.
The benefits of legalization outweigh the costs. While some legislators and constituents are concerned that legalizing recreational marijuana would increase consumption of other illicit drugs, increase motor vehicle crashes, and reduce workplace productivity, there is no evidence to support these claims. In fact, legalized cannabis has been found to reduce opioid use by 33 percent, have no effect on traffic fatalities, and have no impact on occupational accidents or rates of employee absenteeism. This is primarily because marijuana consumption does not change dramatically following legalization.
Legalizing, regulating, and taxing recreational marijuana would spur economic activity, create jobs, shrink the black market, and generate new state tax revenues. While tax revenues from legalizing marijuana are modest and will not solve Illinois’ fiscal issues, they would still improve the state’s budget situation, fund improvements to Illinois’ critical infrastructure and public education system, and reduce criminal justice costs.
Illinois should legalize, regulate, and tax recreational marijuana.