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McHenry County approves 3% tax on marijuana sales

A mature marijuana plant beginning to bloom under artificial lights can be seen May 20 at Loving Kindness Farms in Gardena, California.
A mature marijuana plant beginning to bloom under artificial lights can be seen May 20 at Loving Kindness Farms in Gardena, California.

A 3% countywide tax on the gross sales of marijuana retailers was approved by the McHenry County Board Tuesday despite some reservations from board members about whether the tax should be set at its state-mandated cap.

Under Illinois' new recreational marijuana law – which takes effect Jan. 1 – Illinois residents will be allowed to buy and possess 30 grams of marijuana, 250 milligrams of THC in a cannabis-infused product and 2.5 grams of a concentrated cannabis product. Nonresidents are allowed to buy half of those amounts.

Last month, the county's Finance and Audit Committee recommended a 3% retailer tax for board approval. Since then, the measure had been under a 30-day review period.

Board member Mike Skala, who chairs the finance and audit committee, said during Tuesday’s meeting that he had a hard time wrapping his head around allowing an economic advantage over other municipalities and counties for a drug that still is illegal at the federal level and will cause other problems down the road.

Board member John Reinert proposed an amendment to set the tax rate at 1% for the first year, which would increase to 2% in the second year. In the third year, Reinert said the board could take a look at how much revenue is generated from the tax and determine where another increase is feasible.

Board member Michael Vijuk said he thinks its makes sense to reassess the tax rate in the future but was concerned about the impact of setting a lower rate and missing out on revenue that could go to the McHenry County Sheriff’s Office or public health services related to marijuana.

The amendment ultimately was defeated by a 5-17 vote with board members Reinert, Vijuk, Larry Smith, Charles Wheeler and Thomas Wilbeck voting yes. Board member Pamela Althoff abstained.

The ordinance setting the 3% tax rate then was approved by an 18-4 vote with Reinert, Smith, Wheeler and Wilbeck voting no. Althoff abstained.

McHenry County Board Chairman Jack Franks said he was disappointed with the vote and by setting a higher tax rate, the county will be allowing illicit markets to remain competitive. This, in turn, could lead to less revenue for the county than what could have been generated with a lower rate, he added.

In addition to the municipal and county sales taxes that could be imposed, cannabis-infused products will be hit with a 20% sales tax, according to Illinois recreational marijuana law.

Any cannabis other than a cannabis-infused product with a level of THC – the psychoactive chemical in marijuana – at or below 35% will receive a 10% sales tax.

Any cannabis other than a cannabis-infused product with a THC level greater than 35% will receive a 25% sales tax.

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