House Bill 1438: Cannabis Regulation and Tax Act

The US has been slowly on the journey to legalizing recreational use of cannabis at a state level with Colorado and Washington being the first to pass such legislation in  2012. Since then, recreational cannabis has been legalized in a total of 10 states and the District of Columbia. 

Background

On May 31st, 2019, the Illinois legislative passed H.B. 1438, sponsored by Sen. Heather Steans and Rep. Kelly Cassidy, on a 66-47 bi-partisan vote. It was signed into law by Gov. Pritzker, who led his campaign with a promise of legalizing recreational cannabis, on June 25th, 2019. The law allows for use of recreational cannabis by adults of age 21 and older with a maximum possession of 30 grams. Illinois is joining the other 10 states in legalizing recreational cannabis in a short 6 months, as the law goes into effect in January, 2020.

Illinois had originally enacted a pilot program in 2013 to make medicinal cannabis legal, but not without many restrictions. This bill, called H.B.1, was set to expire in 2018 if not renewed by legislators (Marijuana Policy Project). Under the bill, only patients with qualifying medical conditions and registered with the state as medical cannabis card holders were allowed a prescription for a maximum of 2.5 ounces every two weeks which could be filled at a state-regulated dispensary. Other restrictions included the prohibition of cultivation at home and participation of professions such as firefighters, law enforcement personnel, and commercial drivers. The bill was put in action in 2015 and adjusted several times.

In 2016, Governor Rauner made strides to decriminalize minimal cannabis possession by signing Illinois’ Decriminalization Bill, Senate Bill 2228, into law (Garcia). The bill made cannabis possession punishments more lenient with possession up to 10 grams punishable with only a $100-$200 fine. The law also expunged civil citation record of anyone who had 10 grams or lower.

The bill passed this legislative session is not without its restrictions, but allows for a more comprehensive control of the distribution of cannabis. The bill will aid disadvantaged communities and further decriminalize those affected by the “war on drugs.” The end of cannabis prohibition in Illinois allows for taxation income, new jobs, and stimulation of the economy.

Decriminalization

From the start of the “war on drugs,” cannabis prohibition has been disproportionately targeting people of color namely in disadvantaged communities. Originating in 1971, the “war on drugs” was a fight against crack cocaine and heroin in disadvantaged neighborhoods, but soon, it became clear to authorities that cannabis was an easier target (American Civil Liberties Union). The enforcement of cannabis laws have been heavily concentrated in areas based on race and income. Thus being, a Black person is 3.73 times more likely to be arrested for a cannabis possession than a white person, according to ACLU in “Report: The War on Marijuana in Black and White.” Not only do arrests related to cannabis take away resources that could instead be allocated to disadvantaged communities, but they also have been proven to not be effective in minimizing cannabis availability and usage. 

Such laws that recognize recreational marijuana as legal lead to criminal reform and benefits the economies of disadvantaged communities. Although, cannabis can still be penalized in the workplace. Employers are still allowed to have a zero-tolerance policy towards cannabis use.

Before H.B. 1438, cannabis was heavily criminalized (Findlaw). Sentences for cannabis possession or distribution were sentenced similarly to major crimes. With the passage of H.B. 1438, an estimation of around 710,000 cannabis cases could be expunged. The cases include anyone who had a possession at or lower than the maximum of 30 grams, except for in cases where they were related to violent crimes. For cases between 30 and 500 grams, there will be a streamlined clemency process (Marijuana Policy Project).

Here were the punishments under law prior to H.B. 1438:

unnamed.png“Illinois Marijuana Laws at a Glance,” Findlaw

To see how drastic these punishments were, here is an explanation of felonies in Illinois (The Law Offices of Andrew Nickel):

  • Class X Felony Illinois – Up to 30 years in prison and/or a fine of up to $25,000
  • Class 1 Felony Illinois – Up to 15 years in prison and/or a fine of up to $25,000
  • Class 2 Felony Illinois – Up to 7 years in prison and/or a fine of up to $25,000
  • Class 3 Felony Illinois – Up to 5 years in prison and/or a fine of up to $25,000
  • Class 4 Felony Illinois – Up to 3 years in prison and/or a fine of up to $25,000

Helping Disadvantaged Communities

Not only does the bill decriminalize past cannabis possessions, the bill also has measures to allocate resources to disadvantaged communities who were heavily affected by the war on cannabis. This is especially pertinent where communities that have a large amount of people who were convicted of a minor offense, related to someone who was or is living in an area affected by the war on cannabis and/or poverty rates (Marijuana Policy Project). These individuals who qualify can potentially have access to a special allocation of revenue called the Cannabis Business Fund to diminish start-up and licensing costs.

The Cannabis Business Development Fund is starting at $12 million in July, 2019 (Marjiuana Policy Project). In summary, it is used to make the cannabis industry accessible to marginalized people. For example, it provides outreach to attract applicants for licensing, assist with job training, waive or reduce fees, and provide low-interest loans. The Fund will also conduct a study to evaluate whether the program successfully caters to marginalized peoples, minorities, women, veterans, or people with disabilities.

Our Economy

Legalizing recreational marijuana stimulates the economy by creating new jobs and brings in millions of dollars in profits. The lack of prohibition costs and the newfound income from taxation will greatly benefit our state’s deficiencies. For instance, Colorado made a profit of $240 million in adult-use marijuana for the 2018 fiscal year.

In the beginning of this year, there is opportunity for up to 75 additional dispensaries, 40 licenses for craft growers (those who grow recreational cannabis), 40 processor licenses (those who have products made with cannabis), and transporter licenses. Cannabis sales will have a tax between 10% to 25% depending on the type of product (Caruso). Dispensaries and cultivators will have around a 7% gross receipts tax. Moreover, with the state experiencing an estimated budget deficit around $3.2 billion for the year 2020 and a long-term debt of $7 billion, legalization of cannabis is projected to bring in $500 million annually when fully matured (Hancock, Nowicki) (Driscoll). 

Conclusion

The Illinois passed the House Bill 1438 spring 2019, which will legalize a maximum possession of 30 grams and expunge minor cannabis offenses. In June 2019, Governor Pritzker signed the bill into law, keeping one of his biggest campaign promises. 

The legal distribution of cannabis will bring in numerous economic benefits to disadvantaged communities as well as around $500 million in revenue annually, largely aiding in Illinois’ long-term debt and deficits.

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