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TO: Mayor Richard Irvin and City Council
FROM: Alex Alexandrou, Chief Management Officer
Martin Lyons, Chief Financial Officer
DATE: September 4, 2019
SUBJECT:
An Ordinance Amending the Municipal Code of the City of Aurora by the addition of Chapter 44 Imposing a Municipal Adult Recreational Cannabis Retailer's Occupation Tax.
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. If the City of Aurora chooses to allow the sale of Adult Recreational Cannabis, the city must pass an ordinance setting the local tax rate. The deadline to complete this step is October 1, 2019 in order to collect taxes as of January 1, 2020. Completing this step does not obligate the city to opt-in, however, it may take the Illinois Department of Revenue up to 90 days to process ordinances.
BACKGROUND:
The State of Illinois has approved the retail sale of Adult Recreational Cannabis in Illinois, setting a limit of a 3.0% excise tax. The state has advised all municipalities that they should adopt a local ordinance by October 1, 2019 in order to be eligible for the collection of this tax by the state effective September 1, 2020. The attached ordinance proposes that if the City of Aurora opts to allow the sale of Adult Recreational Cannabis it will be locally taxed at 2.0%.
DISCUSSION:
Using information provided by the State of Illinois, the Illinois Municipal League and staff research regarding the establishment of cannabis sales in other states, the attached Ordinance proposes a Cannabis excise tax rate at 2.0%. This tax rate is in concurrence with the State of Illinois suggestion to not set the rate at the maximum of 3.0% initially. As this is a retail sale of products, 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%, making the effective rate for the City 4.25%.
Revenue projections...
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