Yes, Springfield, you can spend the money
Tuesday, Jan 19, 2021 - Posted by Rich Miller
* WICS TV…
Illinois marijuana sales brought in over a billion dollars last year.
The sales tax from cannabis can help cities like Springfield, but because of a state law, the capital city can’t currently use any of the sales tax revenue.
“It’s a conundrum for us because here we are getting this money, we want to spend it and allocate it, but we can’t because our hands are tied due to state law,” City of Springfield Budget Director Bill McCarty said.
* SJ-R…
The reason being that Springfield only has two dispensaries selling recreational products — both owned by the same company, Ascend Wellness.
If McCarty were to disclose the revenue the city’s received from the tax, he would in effect be disclosing their sales, which is a violation of state law.
The only people with access to the confidential information are McCarty, Mayor Jim Langfelder, deputy mayor Bonnie Drew and city attorney Jim Zerkle.
Per guidance received from the Illinois Department of Revenue, McCarty said the city would need at least five recreational dispensaries before it could disclose cannabis revenue as the law is currently constructed.
“Therefore, we’re simply sitting on the money,” McCarty said. “I know how much has come in, but it’s all mixed in with our regular sales tax. So it’s not reported individually out there anywhere, and I’m not reporting it. We’re also not putting it in the budget, and we’re also not spending it.”
* So, I checked with the governor’s office…
The administration remains committed to ensuring the new adult-use cannabis industry benefits communities across the state which is why the Cannabis Regulation and Tax Act does not prevent municipalities from spending revenue received from taxes imposed on the sale of cannabis. Though Springfield is currently home to only one dispensary, they are legally allowed to spend tax dollars received from the dispensary if they do not identify the source of the funding in their budget.
Background…
Springfield is one of 44 municipalities with only one dispensary. The IL Dept. of Revenue includes cannabis dollars in lump sum payments to municipalities, which include general sales tax and the motor fuel tax, which publicly protects the source of any cannabis tax dollars.
- Bruce( no not him) - Tuesday, Jan 19, 21 @ 3:04 pm:
If they can’t spend it, maybe just give it back to the state? S/
- Merica - Tuesday, Jan 19, 21 @ 3:08 pm:
why doesn’t this money go to pensions? crazy
- Perrid - Tuesday, Jan 19, 21 @ 3:10 pm:
So what, they just have to lump it in with the normal sales tax revenue and everything is copacetic? Why was it assumed that Springfield would have to report it separately, in the budget or whatever?
- Essential State Employee - Tuesday, Jan 19, 21 @ 3:11 pm:
==why doesn’t this money go to pensions==
Or to fixing the city streets? Especially the major ones full of potholes that are heavily used. MacArthur, South 5th and 6th, the list goes on and on (although I thought all of these were still under IDOT jurisdiction because they are former state and US routes).
- Anyone Remember - Tuesday, Jan 19, 21 @ 3:12 pm:
Merica -
Actually, half of the proceeds is allocated as an additional payment to police and fire pensions.
- Anyone Remember - Tuesday, Jan 19, 21 @ 3:13 pm:
Essential State Employee -
And the other half is designated for economic development on the East Side of Springfield.
- essentially working - Tuesday, Jan 19, 21 @ 3:20 pm:
Fascinating how they were able to take almost everything that is wrong with government control of markets and bundle it into one initiative.
- Brenden Moore - Tuesday, Jan 19, 21 @ 3:30 pm:
The reason Springfield can’t spend it is because the City Council voted last year to use the 3% tax for specific purposes (half towards an extra payment to police/fire pensions and the other half towards east side economic development). They could spend it if the revenue was just going into the corporate fund. But it’s not.
- Blake - Tuesday, Jan 19, 21 @ 3:31 pm:
“if they do not identify the source of the funding in their budget”
What does that mean? Just that they are not allowed to set up a separate fund for it? Have to put it in their General Revenue Fund?
- Blake - Tuesday, Jan 19, 21 @ 3:32 pm:
It appears Brenden Moore answered my question as I was typing.
- Tommydanger - Tuesday, Jan 19, 21 @ 3:53 pm:
‘Spend the money; you just can’t say where it comes from.’ That doesn’t sound so much like sound certified government accounting practices as much as it sounds like laundering money for an illegal enterprise.
- DuPage Saint - Tuesday, Jan 19, 21 @ 4:08 pm:
Everything about marijuana sales, growth anything should be disclosed. This is a special license and benefit not some grocery store. And as for disclosure I would go for income to owners and who owners are and what political contributions they have made over last ten years.
- Al - Tuesday, Jan 19, 21 @ 4:17 pm:
I agree with Dupage saint on Sunshine. Would also be interested to know the gross revenue and cost of goods sold for our Liquor Warehousemen too.
- JoanP - Tuesday, Jan 19, 21 @ 4:40 pm:
=The reason Springfield can’t spend it is because the City Council voted last year to use the 3% tax for specific purposes =
Then they should:
a) blame themselves, not the State, and/or
b) take another vote
- Bill McCarty - Tuesday, Jan 19, 21 @ 4:50 pm:
Brenden is correct. We absolutely could spend the money if allocated to general purposes, but the Council has dedicated it, which means I have to transparently (which is a good thing by the way) budget it. Doing so would divulge the amount collected and thus, violate state law. Additionally, other city elected officials and members of the public rightfully want to know what the tax is bringing in and as it stands, their finance offices cannot tell them. I’ve confirmed this with some of my counterparts in the Chicago area.
- Leslie K - Tuesday, Jan 19, 21 @ 5:17 pm:
Was the decision to dedicate the money part of negotiations over whether Springfield would opt-in to recreational sales?
Definitely sounds like a decision that needs a do-over. Or start wooing additional companies to open up more dispensaries in Springfield. Just sayin’ it could be a win-win…
- Pelonski - Tuesday, Jan 19, 21 @ 5:48 pm:
Bill,
It sounds like the city council’s ordinance has tied your hands, not state law.
- Anonymous - Tuesday, Jan 19, 21 @ 6:17 pm:
Leslie and Pelonski, I appreciate your comments.
Leslie, that was a Council decision from the get go when passing the MROT (Municipal Retailers Occupation Tax). I am sorry, but I can’t speak to their internal discussions/negotiations on that.
Pelonski, in a manner of speaking, you are correct. I suppose it is a philosophical discussion on whether communities should be able to specifically direct the dollars collected from the tax. As it stands, they cannot except under very general terms. Further, it is State law that does prevent any cities from reporting to their Councils and the public what the cannabis tax revenue amounts are until there are at least 5 dispensaries in town (per IDOR), inhibiting transparency. As I mentioned, Springfield is not the only city that wishes it could report that revenue and none of us can at the moment.
- Captain Obvious - Tuesday, Jan 19, 21 @ 7:38 pm:
Why is it a problem for the public to know how much revenue a dispensary generates? This is a government sanctioned business that would not exist legally without that special dispensation granted by the people of Illinois. We should not be prevented from seeing all the details of its operation. It is not a wholly private business.