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Yes, You Can Still Be Fired For Using Cannabis: Making Sense of Employment Discrimination Post-Legalization In Illinois

 

By Jaye R. Lindsay, Esq., Crossroad Legal

Like most well-intentioned laws, the sweeping legislation known as the Illinois cannabis Regulation and Tax Act (CRTA), passed in December 2019, included wide-ranging implications for employees and employers throughout the State. For one, the law effectively made it completely legal to consumer or possess cannabis for personal recreational use. But this left open the question of whether a person could be fired for testing positive for cannabis or cannabinoid compounds. Obviously, employers want to make sure they have a right to prohibit people from operating heavy equipment or showing up to work high. But how does an employer do that?

After all, unlike alcohol, THC remains in your system for days or even weeks. A person could test positive for THC weeks after use and at a time when there is no residual impact on functioning at all. Thus, it presents the challenge of balancing the need to allow employers to ensure a safe work environment and the right of the people to use a lawful substance that has many known benefits, including medicinal uses. Cannabis lawyers across the state remain divided on how to best advise clients on this issue. But it does appear, at least for the time being, that the Illinois General Assembly agrees people can be terminated for lawful use of cannabis. Here’s what you should know.

Conflicting Laws

There is now some conflict between two laws in Illinois. First, Gov. J.B. Pritzker signed into law the amendments contained in Public Act 101-0593, which allows an employer to revoke an offer of employment if it is discovered the applicant used cannabis prior to starting the job.

Compare this with newly passed amendments to CRTA, which made no changes to the existing language from the Right to Privacy in the Workplace Act. Under that law, employers in some situations are restricted from discriminating against employees based on the use of lawful products. The term “lawful products,” carries some implications, but even the law acknowledges that where legal substances are consumed off the employer’s premises and not during work hours, discrimination is prohibited.

How the Conflict of Laws Creates Tension for Employers and Employees

As one can imagine, this all presents a big problem. After all, THC can show up in tests weeks after use and long after any possible effects would have worn off. This distinguishes cannabis from alcohol and many other substances that can only be detected during active intoxication. So, how should employers handle the situation. If they allow employees to test positive for THC, they could face serious liability if someone is hurt on the job. Imagine someone operating power tools or heavy machinery while intoxicated. But if the employer terminates the employee or passes up an applicant based on past use, then a discrimination claim may be made.

Key Provisions of CRTA Attempted to Address the Problem

Under the CRTA legislation, the law is clear about what it does not do:

  • An employer can still terminate employees for using or possessing cannabis on the job
  • Nothing in the law stops an employer from having a reasonable zero tolerance policy with respect to use and possession on the job
  • Nothing in the law prohibits an employer from disciplining or terminating employees for violating their policies
  • Nothing in the law forces employers to allow employees to work under the influence
  • The law does not create a specific right of action to sue employers for failing to comply. This simply means that a plaintiff would still need to prove all the typical elements of a claim for discrimination, without special consideration under this law.

However, the law also goes on to say that an employer can consider an employee impaired if they have a “good faith belief” that the employee is showing signs of “articulable symptoms while working” and which limit or diminish that employee’s work performance. The law provides specific examples, such as effects on:

  • Speech
  • Physical dexterity
  • Agility
  • Coordination
  • Demeanor
  • Irrational or unusual behavior
  • Negligence or carelessness in operating equipment or machinery
  • Disregard for the safety of the employee or others
  • Involvement in any accident that results in serious damage to equipment or property
  • Disruption of a production or manufacturing process
  • Carelessness that results in any injury to the employee or others.

Options to Appeal an Employer’s Disciplinary Actions

The law also provides that if an employer decides to terminate or discipline an employee based on one of the good faith factors above, then the employer must provide a mechanism for the employee to contest that decision and make a reasonable dispute regarding the facts.

Early Court Decisions 

Illinois’ legalization law is still very new, so there have not been many legal challenges in the courts yet.  Other state statutes, however, have been challenged through litigation. For instance, in Whitmire v. Wal-Mart Stores Inc., 359 F. Supp. 3d 761, 791 (D. Ariz. 2019), the federal court reviewing a discrimination suit based on Arizona law held that without evidence that the employee actually “used, possessed or was impaired by marijuana at work on [a date], it is clear that Defendant discriminated against Plaintiff in violation of [the state’s Medical Marijuana Act] by suspending and then terminating Plaintiff solely based on her positive drug screen.”

What this Means for Employers and Employees in Illinois

This decision, though not legally binding on any Illinois court, does give some hope to cannabis advocates and those supporting the move to decriminalize cannabis in all its forms. It seems that employers may wish to have clearer policies that directly address the company’s no tolerance rules and how those will be enforced. Likewise, for employees who are disciplined and/or terminated for cannabis use, there is a strong chance that they could make successful claims for discrimination in the future. Of course, this analysis does not even touch upon the potential concerns relating to medicinal cannabis use and how discrimination may actually constitute a violation of the Americans with Disabilities Act or other laws designed to protect the rights of those with healthcare needs.

For those facing workplace discrimination based on cannabis use, it’s always a good idea to consult with someone who understands employment law and cannabis regulation. Skilled cannabis lawyers are available throughout the state, and we will continue working to stay abreast to changes in legislation.


About the Author: Jaye R. Lindsay is an experienced trial lawyer in southern Illinois, serving the region from the firm’s offices located in O’Fallon, IL and Mount Vernon, IL. He owns Crossroad Legal, a veteran-owned and operated law firm, focusing on criminal defense and personal injury. He and his firm are ardent supporters of fundamental liberties and strong advocates of cannabis legalization and criminal justice reform. Jaye can be reached at (618) 515-5555 or by visiting the firm at www.Crossroadlegal.com.

Illinois Adult Use Cannabis Monthly Sales Figures 2020

ILLINOIS: The Illinois Department of Financial and Professional Regulation, Office of the Secretary, issued updated sales figures for the state’s adult use cannabis sales.

Here are the Illinois full year sales figures for 2020, broken out by monthly totals.

 

Cresco Labs Opens Tenth Illinois Sunnyside Dispensary In Naperville

The Company increases its national retail footprint to 20 operating stores

ILLINOIS: Cresco Labs, one of the largest vertically integrated, multi-state cannabis operators in the United States, announced today the opening of its tenth Illinois dispensary in the third largest city in the state, Naperville. The adult-use Sunnyside dispensary is located at 2740 W. 75th St., one of the busiest shopping areas in Naperville, a western suburb of Chicago.

 

“Our retail platform continues to outperform because we put such a premium on finding the right location for our stores, and Naperville is another example of opening a new location in the heart of one of the city’s most vibrant retail spaces—on the same block as Costco, Whole Foods and Starbucks. We are normalizing the cannabis shopping experience,” said Charlie Bachtell, Cresco Labs’ CEO and Co-founder. “With the opening of Sunnyside Naperville, we are proud to be the first cannabis operator to reach ten dispensaries in Illinois. This milestone and the acceleration of our store growth this year is a reflection of our differentiated strategy and our best-in-class ability to execute it.”

Illinois is one of the most robust cannabis markets in the country where state retail sales are on an annual run rate of more than a billion dollars.1 Sunnyside retail stores continue to command an outsized share of the market.

Sunnyside Naperville will employ nearly 40 people in the nearly 8,400 square foot dispensary featuring 12 points of sale. Adult-use customers can browse live inventory, place online orders through Sunnyside.shop and pickup orders in-store. They will receive a confirmation when their order is ready for pickup. Sunnyside Naperville requires all customers to wear masks and practice social distancing. Regular store hours are 9:00 AM to 9:00 PM CST daily, seven days a week.

In Illinois, Cresco Labs has 10 operating stores in the River North and Lakeview neighborhoods of downtown Chicago; Chicago northwestern suburb of Schaumburg; villages of Elmwood Park and Buffalo Grove in Cook County, the most populous county in the state; northern cities of Rockford and South Beloit, which is near the Wisconsin border; city of Champaign in central Illinois; and city of Danville in eastern Illinois near the Indiana border.

The Company has 20 operating stores in six states, including Illinois, Arizona, Ohio, Pennsylvania, New York and Massachusetts.

DCFS And Illinois Courts Refusing To Follow New Cannabis Anti-Discrimination Law: Parents Risk Losing Children Over Cannabis Use Despite Legalization

By Jay Lindsay, CROSSROAD LEGAL

ILLINOIS: On June 25, 2019, Governor J.B. Pritzker signed into a law sweeping new legislation legalizing personal recreational use of Cannabis in Illinois. Under the law, Illinoisans can now use cannabis not only for medicinal purposes, but also recreationally. The law also prohibits discrimination based on cannabis in certain situations. Specifically, the anti-discrimination provision is strategically drafted to avoid cannabis users from suffering negative or adverse impacts in Illinois family and juvenile courts, including actions by Child Protective Services. Despite passage of this law, DCFS and courts remain unwilling to comply with these anti-discrimination rules.

To fully understand why this is important and how it affects Illinois parents, a little background is necessary.

The Cannabis Regulation and Tax Act of 2019

Effective the first day of 2020, Cannabis became legal for personal use in Illinois. The new law is entitled the Cannabis Regulation and Tax Act, and the personal use provisions are found in the Illinois Code at 410 ILCS 705/10-5 et seq. Under the new law, Illinois residents are legally permitted to use and possess Cannabis and Cannabis-related products. There are, of course, limitations.

POSSESSION OF CANNABIS

  • Up to 30 grams of Cannabis in raw form
  • Cannabis-infused product or products containing no more than 500 mg of THC
  • Five grams of cannabis product in concentrated form 

PRIOR INCARCERATIONS

Under House Bill 1438, which ultimately became the new law last year, the Governor has created a clemency process that will ultimately help to exonerate and clear the records of hundreds of thousands of people convicted of minor Cannabis charges. 

  • Automatic expungement for any possession charge of up to 30 grams
  • Potential clemency for possession of 30-500 grams, but only upon petitioning a court to vacate the conviction.

The Marijuana Policy Project estimates that this will result in an estimated 770,000 overturned convictions. This is perhaps the most notable part of the legislation, because it could effectively re-enfranchise almost a million Illinois residents of things like voting and gun rights. Under current law, drug-related convictions can be used as a reason for the Illinois State Police revoking or denying a Firearm Owners Identification Card (FOID).  Likewise, for felony convictions, many people lose the right to vote. Many of these rights are now likely subject to restoration.

Public Support for Cannabis

Before directly addressing the issue of discrimination, it is worth noting that the majority of Illinoisans support legalization. Even in the most rural and conservative reaches of the state, Cannabis is gaining wide-spread acceptance. According to the advocacy group, Legalize Illinois, the following statistics were reported in relation to resident approval of legalization:

  • Chicago: 77% support and 22% oppose legalization
  • Downstate: 58% support and 40% oppose legalization
  • Statewide: 66% support and 32% oppose legalization

Anti-Discrimination Provision

Now that the background and legislative underpinnings are clear, we turn to the problem at hand.  Under the new law, there’s a specific provision that directly applies to family courts and actions by the Department of Children and Family Services (DCFS). The provision found at 410 ILCS 705/10-30(a) outlines the precise ways that the government may not use a person’s conduct under the statute. Below, the statute is broken into three parts for clarity:

Neither the presence of cannabinoid components or metabolites in a person’s bodily fluids nor possession of cannabis-related paraphernalia, nor conduct related to the use of cannabis or the participation in cannabis-related activities lawful under this Act by a custodial or noncustodial parent, grandparent, legal guardian, foster parent, or other person charged with the well-being of a child . . .

. . . shall form the sole or primary basis or supporting basis for any action or proceeding by a child welfare agency or in a family or juvenile court, any adverse finding, adverse evidence, or restriction of any right or privilege in a proceeding related to adoption of a child, acting as a foster parent of a child, or a person’s fitness to adopt a child or act as a foster parent of a child, or serve as the basis of any adverse finding, adverse evidence, or restriction of any right of privilege in a proceeding related to guardianship, conservatorship, trusteeship, the execution of a will, or the management of an estate . . .

. . . unless the person’s actions in relation to cannabis created an unreasonable danger to the safety of the minor or otherwise show the person to not be competent as established by clear and convincing evidence. This subsection applies only to conduct protected under this Act. 

Juvenile Court Act vs. Cannabis Regulation and Tax Act

In a landmark Supreme Court decision, Justice Sandra Day O’Connor wrote, that there is “a fundamental right of parents to make decisions concerning the care, custody, and control of their children.” See Troxel v. Granville, 530 U.S. 57 (2000).

Moreover, the Court wrote, “[t]he liberty interest at issue in this case-the interest of parents in the care, custody, and control of their children-is perhaps the oldest of the fundamental liberty interests recognized by this Court. See id. at 65. 

It is with this context from the Supreme Court that we next must address how Illinois law treats removal of children for abuse and neglect allegations.

Under the Illinois Juvenile Court Act of 1987, DCFS is charged with protecting minors from abuse and neglect. When there is a credible report of abuse, DCFS will investigate the allegations and, if founded, may remove a child from their home, place them into emergency protective custody, then turn the matter over to the local States Attorney for the appropriate county. At this time, the prosecutor will file a petition to adjudicate the minor a ward of the court. If successful, the child will be placed into foster care, while a provider agency, such as Caritas or Lutheran Child and Family Services (LCFS), will take over managing the casework associated with the matter. A service plan is created, and parents must complete the service plan and meet all requirements of the agency before the children can be returned.

Under the Juvenile Court Act, 705 ILCS 405/2-18(2)(f), the court deciding the matter at the adjudicatory hearing may consider:

proof that a parent, custodian or guardian of a minor repeatedly used a drug, to the extent that it has or would ordinarily have the effect of producing in the user a substantial state of stupor, unconsciousness, intoxication, hallucination, disorientation or incompetence, or a substantial impairment of judgment, or a substantial manifestation of irrationality, shall be prima facie evidence of neglect.

Under the Juvenile Court Act drug is not a per se or automatic reason for removal of children. Drug use must create a “substantial” effect on the parent, to the point that the Department feels that the parent cannot properly care for a child. In practice, this is very different, however. Typically, ANY use will be enough for DCFS to remove a child. Historically, this included Cannabis. 

Breaking it Down

Since there are now two potentially conflicting laws, Courts are left to decide whether or not they will follow the new anti-discrimination provision by simply disregarding evidence of Cannabis use, or whether they will continue to view Cannabis as a drug that supports removal of minor children.

Case Examples from Practice

 The author is a former Assistant Public Defender for a rural county in downstate Illinois. In the first year since legalization, numerous cases have come before the court with little evidence of drug use except minor Cannabis possession or positive THC test results. Consider the following* examples:

  • Young mother has argument with boyfriend, and children are removed due to allegations of domestic violence. After 6 months, all services are complete. There was no evidence of illegal drug use, alcohol abuse or other substance-related issues. While under oath, a case worker testified that the sole reason why the children have not yet been returned to the mother from May 2020 to November 2020 is her positive drug tests for THC. At a hearing, one child was returned to a father, in part due to the fact that mother was alleged to have continued using Cannabis.

Rationale – According to DCFS, the mother had a service plan that required her to remain free from all drugs, including Cannabis; therefore, it is the State’s position that even though Cannabis is legal, she is prohibited from using it.

  • Judge orders young mother to receive overnight visits and have children returned within 30 days, due to minimal nature of the case. DCFS refuses to honor the court’s order, based on allegations that the mother is still using Cannabis. A single positive test for THC from several months earlier used to argue that she is unfit to have the children go home. The court allowed the matter to be continued for another 90 days and decided not to return the child.

Rationale – According to DCFS, there were concerns about the mother using Cannabis, because she is underage (18) at the time, and thus use would be considered illegal.

  • Young mother has a messy home and is accused of being under the influence while caring for her small child. Notably, under oath, the police officer repeatedly referred to discovering evidence of illicit drug use in the home. On closer cross-examination, it turned out the mother had an empty vape pen on her nightstand. No Cannabis was located on the property. The mother did admit to using Cannabis at times, but no evidence was provided to indicate she had used Cannabis that day or that she was in possession of Cannabis. While other reasons were used for removing the children, such as the condition of the home, this was a critical piece of evidence heard by and relied upon by the court.

Rationale – According to DCFS, simply having marijuana paraphernalia in reach of a minor child was sufficient to remove the children, as it indicated a drug addiction.

Facing the Dilemma Head-On

With these examples squarely before us, it’s important to note a few things. First, possession of 10 grams or less of Cannabis by a person under the age of 21 is considered a civil violation, punishable by a fine of between $100 and $200. See 720 ILCS 55/4. In fact, possession doesn’t even reach Class A misdemeanor status (comparable to a first-offense DUI) until a minor possesses between 30 and 100 grams of Cannabis. With this in mind, it’s difficult to understand how DCFS and the courts can deprive a parent of such a fundamental liberty as the right to raise one’s own child over such a minor offense. Likewise, the Cannabis Regulation and Tax Act clearly outlines that Cannabis use should not be considered in these court proceedings. The law makes no exception for age of the user.

Where We Go Next 

Ultimately, the problem is that although Cannabis has been fully legalized for recreational use, judges and DCFS are still very much using Cannabis as the sole reason (or at a minimum, a substantial reason) for removing children from parents. And once removed from their parents, children are often kept in foster care for years. If the parent tests positive for Cannabis even once, the courts and DCFS will invariably argue that the parent is failing to make reasonable efforts and substantial progress toward the return of the child. This key language is used to eventually terminate parental rights for good.

It is imperative that the fundamental liberties of parents in Illinois be protected at all costs. As Justice O’Connor wrote in 2000, the right to raise one’s own children is perhaps the oldest recognized liberty in our country’s history. Indeed, this fundamental right is being breached every day in courtrooms across the state, because the clear text of the law is being ignored. Despite Illinois passing a law that prohibits consideration of Cannabis use or possession in DCFS proceedings and juvenile court hearings, state agencies and judges remain completely unwilling to disregard it. In doing so, one could certainly argue that the courts are re-criminalizing Cannabis. In fact, the outcome is that one can lose their children forever for something that amounts to little more than a civil fine if done underage. Imagine losing your children for burning without a permit or littering.

It’s high time that the Illinois legislature put some teeth in the law by creating some form of penalty for state agencies that disregard the law. It also raises the possibility that some parents may have significant civil actions against the State of Illinois where DCFS and provider agencies disregard the law and remove children due to Cannabis use in the home. Illinois NORML continues to advocate and fight hard for the residents of the state every day.

*Due to confidentiality of juvenile court records, the author is unable to discuss specific cases or names of participants.


Jaye R. Lindsay is the founding attorney for CROSSROAD LEGAL, a general practice law firm based in O’Fallon, IL.

Illinois Adult Use Cannabis Monthly Sales Figures (Updated October 5, 2020)

ILLINOIS: Sales of legal cannabis continue to grow here in the land of Lincoln, even as the rest of the US economy still struggles to recover from the COVID-19 pandemic.  Consumer demand for legal marijuana remains.  According to recently released data from the Illinois Department of Financial and Professional Regulation, adult use cannabis sales reached $67.6 million in September, nearly $18 million to out of state customers traveling in from neighboring Indiana and other states where cannabis is not legally available.

Here are the latest official numbers:

ILLINOIS: IDFPR Announces Approval Of Permanent Rules For Conditional Adult-Use Cannabis Dispensary Licenses Tie-breaking Process

Illinois Joint Committee on Administrative Rules Approves Tiebreaker Rules; Dispensary Licenses to be Issued in Coming Weeks

ILLINOIS: The Illinois Department of Financial and Professional Regulation (IDFPR) announced today that permanent rules have been adopted for adult use cannabis dispensary licensees to be selected when there are two or more applicants in the same Bureau of Labor Statistics Regions with tied high scores. The rules, which were filed in June, may be found here.

The approval of these rules allows IDFPR to move forward in awarding the 75 conditional adult use cannabis dispensary licenses that were authorized by the 2019 Cannabis Regulation and Tax Act. Consistent with the new rules, IDFPR will provide a public notice announcing the applicants with tied high scores who, if they meet the requirements in the rules, may participate in the selection process for a conditional license.

“We are pleased that these rules have been adopted, and we remain unwavering in our commitment to ensuring these licenses are issued in a fair and objective way that implements Illinois’ equity-centric law,” said Toi Hutchinson, Senior Advisor for Cannabis Control to Gov. Pritzker. “Additional licenses will be made available in the coming years and these rules will help ensure a strong foundation is established for the licensing process in the future.”

Once IDFPR awards a conditional license, the licensee will have 180 days to find a location within its BLS Region to operate. A license to operate cannot be issued if the location is within 1,500 feet of an existing licensed dispensing organization. More about the awarding of the conditional adult use dispensing organization licenses may be found under 410 ILCS 705/15-25 and 15-30 of the Cannabis Regulation and Tax Act.

In addition, application scoring for craft grower, infuser and transporter licenses is being finalized, and the Illinois Department of Agriculture will announce award dates in the near future.

Pritzker Administration Announces Fourth Month Sales Totals For Illinois Adult Use Cannabis

State’s new adult-use cannabis industry generated more than $37 million in sales in April

ILLINOIS: The Illinois Department of Financial and Professional Regulation has announced preliminary numbers show statewide adult-use cannabis sales in April totaled $37,260,497.89. Dispensaries across the state sold 818,954 items over the 30-day period. Sales to Illinois residents totaled $29,735,650.41, while sales to out-of-state residents totaled $7,524,847.47. These figures do not include taxes collected. A portion of every cannabis sale will be reinvested in communities harmed most by the failed war on drugs.

Medical and adult use cannabis dispensaries remain open as part of the essential businesses and operations named in Governor Pritzker’s executive order signed on March 20, 2020. Both sides of the cannabis industry were included to ensure the cannabis supplier industry protects medical cannabis patients during the COVID-19 pandemic. Additionally, the revenue generated by adultuse cannabis sales funds the important social justice and equity goals at the core of Illinois’ adult-use law.

“Our top priority is to ensure consumers are safe when they go to a dispensary to purchase cannabis,” said Toi Hutchinson, Senior Advisor for Cannabis Control to Gov. Pritzker. “The steps we’ve taken to increase social distancing at dispensaries are accomplishing that, while also enabling this new industry to continue to grow. As such, curbside pickup will remain an option for medical cannabis users to obtain the product they need through May 30.”

Dispensaries are permitted to sell medical cannabis outside of their limited access area on their property or on a public walkway or curb adjacent to the dispensary. Medical cannabis patients will be able to continue to utilize their designated caregiver to purchase medicine for them. However, dispensaries may not deliver medical cannabis to a patient or caregiver’s home. These rules do not apply to adult-use cannabis sales; those must still take place inside the limited access area. A complete list of the rules extended may be found here.

Illinois: Pritzker Administration Releases 2019 Hemp Harvest Numbers

ILLINOIS: The Illinois Department of Agriculture (IDOA) has released final harvest numbers from the 2019 hemp growing season. IDOA issued 651 Hemp Growers licenses for the 2019 season. All but 137 of those licensees planted at least an acre during the inaugural season resulting in over 2.27 million pounds of total yield, with 73% of acres planted being harvested.

“We are encouraged by these yield numbers and optimistic for the 2020 growing season,” said Jerry Costello, IDOA Acting Director.  “The Department has been diligently working to open markets for growers to sell their hemp.  We recently developed a policy allowing licensed hemp growers to sell product to licensed cannabis cultivators for use in medical and adult-use cannabis products.”

Harvest numbers have been broken down into four distinct categories and a fifth to account for undefined variables in reporting.  Farmers reported harvesting 1,482,489 pounds of Biomass, 595,128 pounds of flower, 65,489 pounds of seed and 15,107 pounds of stalk.  Biomass and flower are typically used for their CBD oil, stalks for industrial uses, and seed will be planted this year or used for hemp seed oil.

The Illinois Department of Agriculture is currently accepting applications for the 2020 Hemp growing season.  If you are interested in growing or processing hemp, please visit our website.

Illinois: Pritzker Administration Announces Revenue Figures For First Month Of Adult Use Cannabis

Screenshot 2020-02-25 16.04.04

ILLINOIS: The Illinois Department of Revenue announced that adult-use cannabis sales generated $7,332,058 in cannabis tax revenue during the month of January, with an additional $3,147,928.29 generated in retail sales tax revenue. Governor Pritzker’s recently released budget conservatively estimated the state would collect $28 million in cannabis tax revenue during the remainder of the fiscal year, ending June 30, 2020. Today’s announcement puts the state on track to surpass that estimate.

Once administrative fees are accounted for, 45% of the adult-use cannabis tax revenue will be reinvested in communities disproportionately impacted by the failed war on drugs and used to fund substance abuse and mental health programs. The $3,147,928.29 in sales tax revenue will be divided between the state’s general revenue fund and the local governments where purchases were made.

“Today marks another milestone in the successful launch of Illinois’ legal cannabis industry. Our goal has been to build the nation’s most socially equitable program that includes new opportunities for the communities most harmed by the failed war on drugs. Revenue raised in this first month will soon begin flowing back into those communities to begin repairing the damage done by the failed policies of the past and creating new opportunities for those who have been left behind for far too long,” said Toi Hutchinson, Senior Advisor to Governor Pritzker for Cannabis Control.

The state collects cannabis revenue in two ways: a variable excise rate dependent on THC potency and type of product, and a 7% cultivators excise tax imposed on the sale of cannabis to retailers. Earlier this month, the state announced that over $39 million in adult-use cannabis product was sold at retail stores.

Last Wednesday, Governor Pritzker released his Fiscal Year 2021 budget, which projected cannabis sales would generate $28 million in cannabis tax revenue for the remainder of Fiscal Year 2020 (ending June 30, 2020). As the industry matures, revenues are estimated to grow to $127 million in FY21, of which $46 million will go to General Funds.

Background:

CANNABIS TAX RATES

• Cannabis Cultivation Privilege Tax:

o 7% of the gross receipts from the sale of cannabis by a cultivator or a craft grower to a dispensing organization

• Cannabis Purchaser Excise Tax:

o 10% of the purchase price – Cannabis with a THC level at or below 35%
o 20% of the purchase price – All cannabis infused products
o 25% of the purchase price – Cannabis with a THC level above 35%
o This tax is not imposed on cannabis that is subject to tax under the Compassionate Use of Medical Cannabis Pilot Program Act.

ALLOCATION OF STATE REVENUE

• Minus administrative costs, the remaining state revenue will be allocated as follows:

o 35% for the General Revenue Fund,
o 25% for the Criminal Justice Information Projects Fund to support the R3 program,
o 20% for the Department of Human Services Community Services Fund to address substance abuse and prevention, and mental health concerns,
o 10% for the Budget Stabilization Fund to pay the backlog of unpaid bills,
o 8% for the Local Government Distributive Fund to support crime prevention programs, training, and interdiction efforts, including detection, enforcement, and prevention efforts, relating to the illegal cannabis market and driving under the influence of cannabis, and
o 2% for the Drug Treatment Fund to fund public education campaigns and to support data collection and analysis of the public health impacts of legalizing the recreational use of cannabis.

Cresco Labs Makes History On January 1st With First Sale Of Adult-Use Cannabis In Illinois

ILLINOIS: Cresco Labs, one of the largest vertically integrated multistate cannabis operators in the United States, announced today that the Company served 3,145 people on New Year’s Day at its five Sunnyside* Dispensaries located in Lakeview, Elmwood Park, Champaign, Buffalo Grove and Rockford, Illinois. Sunnyside* also sold 9,258 cannabis products, including Cresco’s house of brands and items from other Illinois suppliers, with an average ticket price totaling $135.

Customers began to form lines outside Sunnyside* locations as early as 8 PM on New Year’s Eve, and lines wrapped around the buildings throughout the day as recreational customers showed their excitement to be part of this historic day. The dispensaries opened at 6 AM to immediately start serving recreational customers, with the first sale in the state of Illinois taking place shortly thereafter at Sunnyside* Lakeview. Jacqueline Ryan from Forest Park was the first customer to purchase adult-use cannabis, followed by siblings Elise and Aaron Swopes, two participants in Cresco’s Chicago incubator program, which is part of the Company’s SEED (Social Equity and Educational Development) initiative, and Illinois Lt. Gov. Juliana Stratton, who played a critical role in shaping the state’s cannabis legislation.

“We’re ecstatic for our Sunnyside* dispensaries to begin serving recreational customers on such a historic day that launches a new era of cannabis and the development of an industry that will bring greater justice, social equity and business ownership opportunities throughout the state,” said Charlie Bachtell, Cresco Labs CEO and Co-founder. “With 13 million residents and 100 million annual tourists, Illinois is predicted to be one of the largest recreational cannabis markets in the United States. Cresco is uniquely positioned in the supply-constrained state, with permission for the largest cultivation footprint at 630,000 square feet and ten retail dispensaries, including three in high traffic areas in the city of Chicago.”

Joe Caltabiano, Cresco Labs President and Co-founder, added, “We’re thrilled to be part of this historic day and to witness firsthand so much excitement from people on the first day of legal cannabis sales. Our dispensaries served thousands of customers on day one by educating new cannabis consumers, making product recommendations and making sure they had a seamless shopping experience. With five newly re-concepted Sunnyside* locations and an additional five dispensaries opening soon in high profile locations such as one next to Wrigley Field and two in Chicago’s downtown Central District, we expect to serve thousands more customers in response to strong demand. Our Sunnyside* concept is designed to move traffic efficiently, so despite the fact that long lines will likely continue in the first few days of adult-use legalization, we are positioned to ensure that each of our customers gets only the best possible service and the products they are looking for. Cresco is already the leader in Illinois, and we expect to be able to maintain this leadership position as the recreational cannabis market grows, contributing solidly to our overall revenue and our profitability.”