Show Me The Money: Where is Illinois Medical Marijuana funds going?
Earlier this year, the Detroit public schooling crisis brought state funding issues into sharp focus: Owing to a complete lack of funding, public schoolteachers in an inner-city Detroit school district were told that there was no longer any money to pay their salaries, prompting a series of “sick outs” (as a replacement for striking, which is illegal).
All across the “rust belt” of America, in formerly industrial, manufacturing-dependent states like Michigan, Illinois, and Philadelphia, a similar story is playing out: As property values keep falling (taking property tax rates with them) and the economy slowly grinds to a standstill, the once deep reservoir of state funding dries up, leaving many communities without access to basic infrastructure, public education, and other services.
While many people have decried this situation as hopeless, in some states, an unlikely hero has emerged: The marijuana industry. In states like Washington and Oregon, where over $200 million in cannabis taxes have been collected from both medical and recreational marijuana sales, citizens are already experiencing quality of life benefits thanks to these states’ willingness to invest this revenue into their communities. In Colorado and Washington, for example, a portion of this tax revenue goes directly into public schools. While Skyler McKinley, deputy director of Colorado Gov. John Hickenlooper’s Office of Marijuana Coordination, cautions that states should not begin to depend on cannabis tax for revenue, he believes they should be proactive about using it to better the lives of their residents.
“Our philosophy has been that marijuana pays its own way,” McKinley explains. “Every dime we bring in from legalization is dedicated to the cost of legalization. That’s regulatory framework first, then public education campaigns about safe and responsible use and then prevention and treatment programs.” After these items are covered, however, the state is free to access marijuana revenue and spend it on education and infrastructure improvements. So far, McKinley says, this approach is working out much better than expected; “This was a lot less vexing than we once thought it would be,” McKinley has stated, echoing the sentiments of other regulators in Colorado. “It turns out government can be pretty good at this.”
It can be, but in some states, residents and marijuana activists fear that it’s choosing not to be: In keeping with a long tradition of government corruption, the Illinois Medical Marijuana Program (the Compassionate Care Act) is already showing worrying signs of mismanagement.
Illinois, which is (according to Reuters) set to face an $8.5 billion budget deficit, has within its grasp the promise of a highly profitable medical marijuana industry. After all, the first thing the Illinois government did once the program was passed into law was impose a set of fees on dispensaries so high that few people who are not already wealthy can even get into the industry. According to business expert Cassandra Dowell of Revolution Enterprises, “In order to apply for a license to grow cannabis, businesses had to pay a non-refundable fee of $25,000, and dispensary applicants had to pay a non-refundable fee of $5,000. Based on the 159 applications for cultivation licenses and 214 applications for dispensary licenses, the state collected more than $5 million in application fees… And that’s just the beginning.
“Cultivators who received a license to operate then paid a $200,000 licensing fee and will be charged a $100,000 annual renewal fee. For dispensaries, the licensing fee charge is $30,000 and the annual renewal fee is $25,000.” In addition to these fees, the Illinois’ cannabis pilot program act also created two new state taxes: a cultivation tax of 7% and a surcharge tax.
Where does all of this money go? According to both Dowell and the government of Illinois, all of the revenue collected under the state’s cannabis pilot program is deposited into the “Compassionate Use of Medical Cannabis Fund in the state treasury.”
As is the case in Oregon, Colorado, Washington, and other states with an established marijuana industry, the first duty of this money is to cover all of the expenses related to the program. How much does the program cost? Hard data is difficult to locate owing to the newness of the program in Illinois, but a look at nearby Michigan’s program provides a useful guideline: Even though, unlike Illinois, Michigan does not tax its medical marijuana sales, the various fees associated with its program both covered administrative costs and generated over 6 million dollars in surplus in the program’s first year alone. Additionally, a report from the Marijuana Policy Project Foundation states that, “New Mexico and Vermont have been able to run comprehensive medical marijuana programs for less than $800,000, including dispensary regulation, while covering the program costs through fees.”
In short, with the higher fees and taxes present in Illinois, the program has the potential to be massively profitable.
Herein lies the rub, however: Unlike other states with a marijuana program, Illinois seems devoid of plans to use this revenue to improve education and the overall quality of life in its communities. Instead, the Medical Cannabis Pilot Program Act states that its “remaining money will be used to fund crime prevention programs.” Why this is so, what kind of programs will be funded, and how to access this funding remains completely unclear.
At the same time, the financial and administrative barriers to opening a dispensary in Illinois are rigging the system in such a way that politicians and their cronies have an unfair advantage. “One person seeking medical marijuana registration from the state is Sam Borek, a former college roommate of Lou Lang, the state representative who sponsored Illinois’ medical marijuana law. According to CBS St. Louis, Borek has reserved at least three-dozen marijuana-related business names,” explains journalist Hilary Gowins. “A friend of the ex-governor is trying to get in on the action as well. Chicagoan David Rosen, who was Gov. Pat Quinn’s chief fundraiser in 2010, plans to open a medical marijuana business in Nevada called “Waveseer” — and interestingly enough, he has also registered the same business name in Illinois.” For Illinois residents, this situation is all too familiar.
Unless grassroots actions are taken, the Illinois Medical Marijuana Program is unfortunately set to maintain the state’s “status quo,” a system wherein the rich—and politically connected—get richer, while the state’s poor and middle classes continue to suffer through the perils of crumbling infrastructure and a creaking public education system.
Cerrone Crowder is the CEO of The D.O.P.E (Delivering Opportunities for People Everywhere) House Inc., a nonprofit based in the Chicago-land area whose mission is aimed at providing equal Medical Marijuana access to low-income patients. As an emergency medical professional for over a decade, “The Weed Professor” has dedicated himself to educating the masses on the numerous health benefits of the cannabis plant. He can be reached at: email@example.com