Illinois dispensaries have hosted long lines and wait times since the New Year.
That was expected.
But what many customers did not expect after finally making their first legal purchase was the sticker shock.
Customers have complained about the high prices of marijuana flower that can reportedly be purchased for half the price on the black market.
A study conducted by Colorado cannabis consulting firm, Freedman & Koski, concluded that Illinois “should expect initial market dynamics to keep prices above criminal market pricing, and subsequently some consumers will prefer the criminal market.”
Cannabis markets tend to take 2-3 years to fully mature. During that time, according to the report, three things should happen in Illinois:
- Initial regulatory costs should decrease.
- Economies of scale should push prices down.
- The regulated market will capture or displace the criminal market.
The report estimated that the demand for a fully mature annual marijuana market for Illinois could range between $1.69 billion to $2.58 billion.
Part of the high prices on recreational cannabis purchases is the taxation built into the law.
At the wholesale level, cannabis products are subject to a 7% tax when they are sold by cultivation centers or craft grows.
At the retail level, rather than a blanket tax for all cannabis products, Illinois charges a tax rate based on the relative potency of the cannabis and the type of product. For more about taxation rates for THC, read “Illinois first state to tax potency of THC.”
Individual municipalities can also levy additional taxes on recreational marijuana if they choose to, in .25% increments not exceeding 3.75% in unincorporated areas of a county, .75% in a municipality located in a non-home rule county, and 3% in municipalities located in home rule counties.
As represented in the purchase receipt above from HCI Alternatives in Collinsville, a customer bought a total of $55 of cannabis products and paid $11.55 in total tax.
In the receipt below, a $220 purchase was taxed $1.65 by a county tax, $8.60 by a city tax, $19.25 by Illinois sales tax, and $55 by an excise tax (including a 25% tax for cannabis containing more than 35% THC) for a total of $302.50.
Have you had an experience with sticker shock?
Do you have a receipt you would like to share?
Please contact us and let us know.