Illinois Becomes 11th State to Legalize Weed

Participants in Illinois' new recreational market will have to contend with a lot of taxes and regulations.

Marijuana legalization continues to move at blazing fast speeds, with Illinois today becoming the 11th state to lift its prohibition on recreational use.

Earlier this afternoon, Illinois Gov. J.B. Pritzker (D) signed HB 1438—otherwise known as the Cannabis Regulation and Tax Act—into law. The bill legalizes marijuana possession for adults 21 and over, expunges court records for marijuana-related convictions and arrests, and establishes a taxing and licensing framework for the newly legal industry.

"Legalizing adult-use cannabis brings an important and overdue change to our state, and it's the right thing to do," said Pritzker in a statement, adding that "Illinois is moving forward with empathy and hope."

By signing HB 1438 into law, Pritzker has made Illinois the first state in the country to pass a comprehensive legalization bill through its state legislature. Nine other states have passed ballot measures legalizing the possession and sale of recreational marijuana. The Vermont Legislature legalized the possession, but not the sale of, marijuana for recreational purposes in 2018.

Starting January 2020, Illinois residents will be allowed to possess up to 30 grams of marijuana for personal use, 5 grams of cannabis concentrate, and up to 500 milligrams of a cannabis-infused product. Non-state residents are allowed to possess half this much.

Significantly, the new marijuana legislation will also allow for the expungement of up to 700,000 records of past violations.

Local law enforcement and state police are directed to start automatically expunging arrest records that did not lead to convictions for low-level cannabis offenses. These expungements must be completed by January 2021 for those with post-2013 arrests. Those with arrests from before 2013 will have their records expunged by January 2023.

Meanwhile, those who were convicted for such low-level offenses will receive a pardon from the governor. The law also allows individuals and state attorneys to file motions to dismiss convictions for possession of up to 500 grams of marijuana.

Beginning in May 2020, the state will start issuing licenses for dispensaries, growers, infusers (makers of edibles and other cannabis products), and distributors. A total of 75 of these licenses will be available for dispensaries starting in May, as will another 40 each for growers, distributors, and infusers. More licenses will become available by December 2021.

Illinois will use a points system to award these licenses.

As part of the bill's "equity-centric" approach, applicants who either have past marijuana convictions or have lived in a "disproportionately impacted area"—defined as a census tract with either high unemployment, high percentage of children participating in a free lunch program, or with high rates of marijuana arrests and convictions—will get extra points on their application.

These "social equity applicants" will also be eligible to have half of their non-refundable license application fees waived. These fees range from $5,000 to $100,000 depending on the type of license being applied for, and whether the applicant is a "new entrant" or already active in the state's medical marijuana industry.

Cultivators will have to pay a 7 percent gross receipts tax on what they grow. Consumers will be slapped with excise taxes of between 10 to 25 percent depending on the strength of the marijuana they're buying.

Moving from a black market to a heavily taxed and regulated one is no easy task, so state residents and visitors can expect a lot of bumps in the road as Illinois plows ahead with implementing legalization.

This road will be made all the bumpier given how much discretion the new law gives to state agencies to craft new regulations—an approach that's already caused a lot of trouble in places like Oregon and California.

Nevertheless, that the sixth most populous state in the country has legalized marijuana is a tremendous achievement, and just another sign that ending the war on weed has become mainstream.