Illinois collected $36 million taxes from Wisconsinites for marijuana, new report says

MADISON - Illinois collected $36 million in tax revenue from Wisconsin residents purchasing marijuana in the Land of Lincoln where cannabis is legal, according to a new state estimate.

Wisconsin is in the minority of states whose lawmakers have not legalized marijuana use in some form. Thirty-seven states have medical marijuana programs, including Illinois, Michigan and Minnesota.

Democratic Gov. Tony Evers has proposed legalizing marijuana three times but Republican lawmakers who control the state Legislature have rejected the idea. It appeared at the start of the new legislative session that began in January that GOP legislative leaders were changing course and moving closer to creating a medical marijuana program in Wisconsin after years of opposition to the idea but the effort quickly stalled.

Senate Minority Leader Melissa Agard, D-Madison, has also unsuccessfully proposed marijuana legalization for years and this week released revenue estimates from the nonpartisan Legislative Fiscal Bureau, which show $36.1 million are estimated to be paid in Illinois taxes by marijuana customers in counties bordering the Badger State.

The analysis assumes that all sales to out-of-state residents in counties bordering Wisconsin were made to Wisconsin residents, according to the memo.

"It should upset every Wisconsinite that our hard earned tax dollars are going across the border to Illinois. This is revenue that could be going toward Wisconsin’s public schools, transportation infrastructure, and public safety," she said in a statement. "Instead, Illinois is reaping the benefits of Republican obstructionism and their prohibitionist stance on marijuana legalization."

According to the fiscal bureau estimate based on data from the Illinois Department of Financial and Professional Regulation, revenue from sales to out-of-state residents in Wisconsin-adjacent counties accounted for about 8% of the $462 million in tax revenue Illinois officials received in 2022 from sales of marijuana products.

LFB analysts said the estimate could be lower or higher than the actual amount of taxes paid by Wisconsin residents because it's possible not all sales to out-of-state residents in counties bordering Wisconsin were made to Wisconsin residents.

"For example, two of the dispensaries included in this estimate are located in Jo Daviess County, which borders both Iowa and Wisconsin. A portion of sales at those dispensaries likely were made to Iowa residents," the analysts wrote.

Assembly Speaker Robin Vos in January said legislative leaders have just begun talking about what kind of medical marijuana proposal they could support and suggested Evers' plans to introduce a state budget that legalizes marijuana for recreational use could deter Republican support. He said the Assembly and Senate were not close to an agreement.

His comments came soon after Senate Majority Leader Devin LeMahieu told the Milwaukee Journal Sentinel his caucus, a longstanding hurdle to legalizing marijuana in Wisconsin, was "pretty close" to supporting a medical marijuana program.

Like LeMahieu, Vos has said he would only support a medical marijuana program aimed at treating chronic pain.

"I want to make sure that, at least from my perspective, we are crystal clear this is not about a pathway toward recreational (marijuana), it's not about creating a new industry with all kinds of new revenue for the state," he said. "It's about making sure that people who suffer with a chronic disease get relief in a way that helps their quality of life be better."

"I'm going to do everything I can to make sure that it is helping the people who have a chronic disease, not creating a pathway or a gateway to recreational marijuana somewhere in the future. I think — I know our caucus would not support that. I don't think it'd be good for the state," Vos said.

Evers during his reelection campaign said he would again propose legalizing marijuana in the upcoming budget, a plan that would require users to be 21 to purchase and is estimated to generate $166 million in revenue that Evers wants to use to help fund schools.

Sixty-four percent of Wisconsinites support legalizing marijuana for any use, according to October polling by the Marquette University Law School. More than 80% of Wisconsinites supported the idea of a medical marijuana program, according to 2019 polling.

In 2018, voters in 16 counties and two cities voiced support for the legalization of medical or recreational marijuana through advisory referendum questions on their ballots that year. The referendums solicited opinions on legalizing personal use for adults age 21 years or older.

Molly Beck can be reached at molly.beck@jrn.com.

This article originally appeared on Milwaukee Journal Sentinel: Marijuana sales to Wisconsinites brought Illinois $36M in taxes