Two weeks after voting to allow cannabis dispensaries to operate in the commercial districts along Harlem Avenue and Ogden Avenue, the Riverside Village Board moved on Sept. 19 to tax sales of the product.
Trustees voted 5 to 1 to impose a 3-percent local sales tax on the sale of any recreational cannabis, should a dispensary open in Riverside after it becomes legal to do so in the state of Illinois on Jan. 1, 2020.
The timing of the vote coincides with a request by the Illinois Department of Revenue for municipalities to inform them of their intentions to tax the sale of recreational cannabis, because the agency is working out its procedure for collecting the tax from dispensary businesses and then reimbursing the communities.
Earlier this year, Illinois Gov. J.B. Pritzker signed into law a bill making the sale of cannabis for recreational use legal, at the beginning of 2020. Up to 75 new dispensaries are expected to open as the New Year dawns.
Also beginning in October, companies which currently operate medical cannabis dispensaries will be able to begin applying to the state for the 75 new licenses. Dispensary owners reportedly have expressed interest to village leaders in opening a location in Riverside, Brookfield and North Riverside.
Whether or not any such local dispensary will become a reality remains to be seen, but many municipalities which are interested in the revenue a dispensary is predicted to produce want to have their zoning and tax structures in place to make them attractive to prospective applicants.
Riverside Village Attorney Michael Marrs told village trustees at their Sept. 19 meeting that the original cannabis law provided for the state to begin collecting the local sales tax on recreational cannabis by Sept. 1, 2020.
However, that language is expected to change in a trailer bill currently making its way through the state legislature during the fall veto session, paving the way for a Jan. 1 start for collecting the tax.
“This is one of the issues that’s anticipated to be on the table, to possibly move up that date, so that municipalities don’t miss out on those nine months of revenue,” Marrs said.
As far as imposing the full 3-percent tax – municipalities are allowed to levy anywhere up to 3 percent in .25-percent increments – Marrs said that while some lawmakers have cautioned that imposing the full amount might put a municipality at a disadvantage if a neighboring town levies a lower tax, he didn’t see it as much of a risk.
“It’s early yet, so I can’t say what other communities are doing, but I’m anticipating most places are going to impose it at the maximum.”