Marijuana may still be technically illegal in Iowa, but that is not stopping people from heading to Illinois to purchase it – and they are doing it in record numbers.
Illinois’ taxes are among the highest imposed by states where medical or recreational cannabis products are legal, according to the nonprofit Tax Foundation. As a result, most pot bought and sold in the state is still on the black market, law enforcement officials have said.
But Ostwinkle, a regular visitor since recreational cannabis became legal in Illinois in January 2020, says Iowans are willing to pay the price.
“I think the state of Iowa is pretty hypocritical when it comes to (recreational) marijuana not being legal,” he said. “We all know how many people use it, and that alcohol is much more harmful. But in Iowa, decisions are being made based on politics, not what the people want.”
And as commerce and travel open up across the country, Americans are buying even more legal cannabis than they did last year during the COVID-19 pandemic, which was a record-breaker for the industry.
Nationally, sales are expected to reach $92 billion, up more than 30% from 2020, according to a new analysis by MJBiz Daily, a news source for the cannabis industry in the U.S. and Canada.
In Iowa, the projected $21 million in annual economic benefit from the state’s tiny low-THC medical marijuana program — with about 5,100 cardholders — is expected to be the smallest anywhere in the country, according to MJBiz Daily.
In Illinois, home to a budding industry that is breaking records monthly, industry experts predict purveyors will sell anywhere from $1.2 billion to $1.9 billion in cannabis products by year’s end.
The state budgeted $155 million in new revenue from its adult-use cannabis excise and cultivators’ taxes alone. From January through May, revenue from those taxes reached $278.4 million from recreational sales, as well as $21.3 million from medical.
In East Dubuque, a town of about 1,700 cradled high above the Mississippi River, The Dispensary opened in May on the tri-state border, close to three private universities.
In the first quarter of 2021, the state of Illinois took in more in taxes from adult-use marijuana purchases than it did from sales of alcohol — around $86.5 million compared to $72.3 million, according to the Illinois Department of Revenue.
About 35% of that new revenue will go into the state’s general revenue fund, while about 25% will fund grants for the Restore, Reinvest and Renew Program, helping those most disproportionately affected by the drug war.
Michael Mayes, chief executive officer of the Chicago-based cannabis industry consulting firm Quantum 9, said residents of states that continue to ban a substance so widely available will only help the market grow somewhere else.
He likened the situation to times when cities and towns banned liquor sales on Sundays, only to discover customers went elsewhere.
But in the case of cannabis, which is still a schedule 1 controlled substance in the eyes of the federal government, some of those buyers risk getting arrested on their way home.
Top law enforcement officials in eastern Iowa say that expanded legalization in the U.S. has already emboldened pot tourists.
In Illinois, signs posted in some dispensaries warn buyers from other states to consult their attorneys before making purchases and note that possession and use of marijuana remains illegal under federal law.
Under state law, Illinoisans can legally possess 30 grams, or about an ounce, of cannabis flower. The legal limit for cannabis concentrate is 5 grams. And the limit for cannabis-infused products, such as edibles or tinctures, is 500 milligrams of THC.
Visitors to the state are allowed to possess half those amounts. Yet most dispensaries have no place for customers to consume or use what they’ve purchased, so it’s a foregone conclusion that most customers will drive home with purchases. Many break the law when they cross into other states.
Dalsing said police generally don’t have a problem with people using pot in their own homes, but they do care about those “driving down the street with blunt smoke blowing out the window.”
He worries about road safety and the gateway drug potential for some young users.
In Moline, Illinois, in the border-straddling Quad Cities, Police Chief Darren Gault said it’s too soon to tell how Illinois’ nascent industry will affect arrests for possession and impairment because fewer people were traveling last year during the COVID-19 pandemic, and arrests overall were down.
“I consider it a throwaway year,” he said.
Gault said he’s not currently concerned about the level of pot tourism taking place, but that could change as Illinois begins to introduce cannabis bars and lounges.
“I don’t know if this country is ready for cannabis bars and clubs, which are regulated by the municipality,” he said. “But we’re not necessarily making the laws; we’re enforcing them.”
Gault said he’s also concerned about higher levels of THC content in cannabis products that are being widely commercialized, and what effect that will have on young people.
“It’s a multibillion-dollar industry: And I think it’s worthy of more research to help guide us,” he said. “We need to do a cost-benefit analysis. If the war on drugs wasn’t good for society, is this? We’re way past (accepting) medical marijuana, and we’re headed toward something much different.”
Gault said law enforcement officials in Illinois also haven’t been given much training to deal with the state’s changed reality, though it appears sales of both black market and legal cannabis have grown.
“Because it’s more accepted and it’s become more widespread, there are more opportunities for people — even the criminal element — to be involved,” he said. “It’s made it almost a free-for-all. And that’s become a challenge. “
Illinois sets its level of taxes on cannabis products based on THC content: Those with 35% or less are taxed at 10% of the retail price, and those with more are taxed at 25%. All marijuana-infused products, such as edibles, are taxed at 20%.
Dispensaries pay a 7% tax on their gross receipts. Marijuana purchases also are subject to a 6.25% state sales tax and local sales taxes.
For those in government, the financial benefits, even if they may dwindle over time, are hard to resist.
In East Dubuque, city officials are expected this month to give approval to a plan by The Dispensary to open a consumption lounge in the same strip mall.
“That way, if someone from Iowa wants to be totally legal, they can use the product at the consumption lounge and hopefully have a designated driver and head home,” City Manager Loras Herrig said.
Herrig said the owner of The Dispensary is working closely with local police to ensure people who ingest too much cannabis will be looked after.
“It’s just like alcohol. We want people to do it responsibly,” he said. “They’ve had discussions to help customers make arrangement to get home safely.”
East Dubuque city officials are counting on enough revenue from the 3% local sales tax to build a new fire station and police headquarters in the next year.
They are estimating they will get $300,000 in local sales tax in The Dispensary’s first year, enough to finance the project and begin construction in the fall.
“It’s ironic that a marijuana tax would pay for a police department,” Herrig said.
He said some people in town still don’t condone pot use. But he said he and others have come to the conclusion that people are going to use marijuana regardless, so customers might as well know what they’re buying, and at least the community will benefit.
“Would you rather buy pharmacy drugs in an alley or from a pharmacy?” he asked.