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TO: Mayor Richard C. Irvin
FROM: Christopher Minick, Chief Financial Officer
DATE: February 6, 2023
SUBJECT:
An Ordinance Amending Article 44-XVI of the Municipal Code of the City of Aurora: Municipal Cannabis Retailer's Occupation Tax; Section 44-420 Tax Imposed; Rate
PURPOSE:
The State of Illinois has approved the retail sale of Adult Recreational Cannabis in Illinois, setting a limit of a 3.0% excise tax for Illinois municipalities. In 2019 the City of Aurora chose to allow the sale of Adult Recreational Cannabis and imposed a Municipal Cannabis Retailer's Occupation Tax at the rate of 2% of sales. We now wish to increase the Municipal Cannabis Retailer's Occupation tax to three percent (3%) to allow for increased funding for social programs and special events within the City.
BACKGROUND:
The current Cannabis Retailer's Occupation Tax Rate is set at 2%. The ordinance attached would change the rate to 3% of recreational cannabis retail sales. The deadline to complete this step is April 1, 2023 in order to collect taxes for sales occurring after July 1, 2023. The State allows rate changes for local taxes twice per year, January 1 and July 1. Staff investigated the prevailing Cannabis Retailer's Occupation Tax rates in effect at area municipalities which allow recreational cannabis sales. Of the communities surveyed as attached, only two had tax rates that were 2% or less. The remainder communities all had municipal tax rates at 3%.
DISCUSSION:
Currently there are 2 dispensaries operating within the City limits in Aurora which sell recreational cannabis. In addition to the Municipal Cannabis Retailer's Occupation Tax, this product is also subject to the state sales tax, of which the City receives 1.0% and the Home Rule Sales Tax of 1.25%. If the ordinance is approved as proposed, the total local tax rate for recreational cannabis sales would increase from 4.25% of sales to 5.25%. Note that the municipal Cannabis Retailer's Occupation Tax does no...
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