Cannabis-related businesses in Decatur: Ten reasons the city council should not opt-out
Personally, I was opposed to the state legalizing adult-use cannabis. Combined with smoking, alcohol, and gambling, we are permitting products that are addicting and have significant health consequences. However, adult-use cannabis will be legal in the state of Illinois as of January 1, 2020, and the city council has both the responsibility and opportunity to consider how to regulate adult-use cannabis businesses to maximize their positive impacts (increased tax revenues) while minimizing negative ones (restrictions on the number of dispensaries and appropriate zoning). Below are ten reasons the city council should not opt-out of cannabis-related businesses in Decatur.
1) TAX REVENUE FROM CANNABIS-RELATED BUSINESSES SHOULD GO TO SUPPORT INCREASED NUMBERS OF POLICE OFFICERS IN DECATUR – It is unclear how increased criminal activity will differ in Illinois cities that allow dispensaries compared to opting-out. However, many individuals and organizations have cited increased criminal activity as a significant reason for why the state of Illinois should not have legalized adult-use cannabis and why cities should opt-out of cannabis-related businesses. If these organizations and individuals are correct, Decatur could see a rise in cannabis-related crime in 2020. Meanwhile, the city of Decatur may have fewer police officers in 2020. As background, the city council authorized 153 sworn police officers for calendar year 2019. At the end of August, Decatur had 145 police officers (5% less than authorized) and as discussed at the September 16th city council meeting, total staffing between sworn police officers and potential community liaison officers may not reach 153 in 2020.
Municipalities can impose a 3% sales tax on adult-use cannabis sales, and I would support having revenue from such sales go to support police officer staffing and equipment, public safety pensions, and neighborhood revitalization. How much revenue from sales tax the city could earn is unclear. As one estimate, if we assume that individuals in Decatur are willing to spend as much on adult-use cannabis as they lose annually on video gambling ($29.2 million in 2018), and that 50% of the adult-use cannabis market will come from legal sales, this would result in $438,000 in additional sales tax revenue. In 2018, the average salary and compensation for a police patrol officer was $75,935 (i.e., 5 additional police officers could be supported).
2) IT IS UNCLEAR THAT ANY OF THE STATED NEGATIVE IMPACTS OF ADULT-USE CANNABIS WILL BE WORSE IF THERE IS A DISPENSARY IN DECATUR COMPARED TO INDIVIDUALS HAVING TO DRIVE TO OTHER CITIES TO PURCHASE IT - Many arguments have been made regarding the negative effects of legalized adult-use cannabis and individuals are justifiably upset and concerned that cannabis has been legalized. However, effective January 1, 2020, adult-use cannabis will be legal for individuals over the age of 21 in Illinois whether one agrees or disagrees with the law. As it pertains to dispensaries, the key question is which, if any, of these negative effects will be intensified if adult-use cannabis is sold in Decatur compared to having to drive elsewhere to purchase it? Said another way, what negative effects will be lessened if a city opts out of having a dispensary?
3) ADULT-USE CANNABIS DISPENSARIES CAN SERVE THOSE THAT USE MEDICAL CANNABIS - The city of Decatur currently does not have a dispensary for medical cannabis. One reason may be that the market is not large enough to have one and it is not financially viable. Having an adult-use dispensary could mean that individuals that use medical cannabis do not have to drive to surrounding cities to purchase what will be a legal product effective January 1, 2020. Furthermore, for those who use adult-use cannabis, having a dispensary in Decatur is likely to enhance their quality of life.
4) ADULT-USE CANNABIS DISPENSARIES ARE REGULATED PROVIDING PROTECTION FOR CONSUMERS UNAVAILABLE IN THE BLACK MARKET - Illegal dealers could be distributing cannabis that has unknown or elevated levels of THC or be laced with other drugs. This could result in increased toxicity and subsequent enhanced health risks to using these products. Adult-use cannabis dispensaries provide consumers with products with known THC levels. Recent cases regarding vaping illustrate the significant health consequences of using unregulated products.
5) ADULT-USE CANNABIS PURCHASES SHOULD BE TAXED AT THE HIGHEST RATE ALLOWED – Large numbers of video gambling establishments have resulted in high societal costs and limited compensation for these costs. I am the only member of the council who supports significantly increasing video gambling terminal fees. Video gambling can lead to addiction, bankruptcy, and crime, and it is unclear that current revenue from video gambling offsets its negative societal costs. Similarly, opting out of cannabis-related businesses may result in increased societal costs associated with the state legalizing adult-use cannabis without the city receiving enough revenue to offset them. Furthermore, the city should significantly limit the number of dispensaries that would be permitted, and use zoning laws to ensure that the locations of dispensaries are heavily restricted and away from neighborhoods and places such as schools, churches, and parks.
6) JOBS CAN BE CREATED BY CULTIVATION CENTERS, PROCESSORS, TRANSPORTERS, AND OTHER CANNABIS-RELATED BUSINESSES - In addition to dispensaries, cannabis-related businesses include cultivators, craft growers, processors, and transporters. These businesses will need construction workers to build new facilities or remodel older ones and need workers to operate the businesses. Here is a brief description of some cannabis-related businesses:
a) Cultivator – Business that cultivates, processes, and
transports cannabis and cannabis-infused products to cannabis business
b) Craft grower – Business that cultivates, dries, cures, and packages cannabis to make it available for sale at a dispensary or use by a processor.
c) Infuser – Business that incorporates cannabis or cannabis concentrate into a product formulation to produce a product infused with cannabis.
d) Processor – Business that extracts compounds to produce cannabis concentrate into a product formulation to produce a cannabis product.
e) Transporter – Business that transports cannabis to a cannabis business establishment.
7) CANNABIS-RELATED BUSINESSES INCLUDE CULTIVATION CENTERS, PROCESSORS, TRANSPORTERS, AND DISPENSARIES. DECATUR, ILLINOIS IS CONSIDERED ONE OF THE WORLD’S AGRIBUSINESS CAPITALS - The city of Decatur is internationally recognized as an agribusiness center with the infrastructure, expertise, and skilled workforce in growing and processing agricultural products. Furthermore, Decatur was recently nationally recognized as the fifth-best small city in America for truck driver salaries and jobs. Rather than disallowing cannabis-related businesses such as cultivation centers and craft growers, the city can allow further diversification and growth of one of our most prominent industries.
8) ALLOWING CANNABIS-RELATED BUSINESSES SUCH AS CULTIVATION CENTERS COULD HELP REVERSE THE CITY’S LONG-TERM TREND OF DECREASED EQUALIZED ASSESSED VALUES AND INCREASED PROPERTY TAXES. Cultivation centers and craft growers require large buildings. Cultivation centers can have up to 210,000 square feet for cultivating plants and craft growers can be permitted up to 14,000 square feet. Occupancy of Decatur’s empty buildings can help offset substantial reductions in equalized assessed values in our city. From 2009 to 2018, Decatur has seen the total taxable assessed value decline from $928.5 million to $824.5 million (11% decrease). Simultaneously, property tax collected has increased from $11.2 million to $13.8 million (23% increase).
9) OVERALL LOSS OF RETAILS SALES IN DECATUR MAY INCREASE AS INDIVIDUALS GO ELSEWHERE TO PURCHASE CANNABIS AND OTHER PRODUCTS. According to a retail leakage and surplus analysis conducted in 2018, Decatur is $144 million below its potential retail sales in six areas such as food & beverage stores and clothing & clothing accessory stores. If this retail leakage was brought to $0, this would result in $3.6 million in additional sales tax revenue to the city (1% from state, 1.5% from city home rule). Consumers required to drive to other cities such as Springfield and Urbana to purchase legal cannabis may spend their other discretionary dollars in these cities further increasing retail leakage.
10) THE NUMBER OF STATES LEGALIZING ADULT-USE CANNABIS IS LIKELY TO INCREASE – 33 states have legalized cannabis for medical use and 11 states have legalized adult-use cannabis. Other states have decriminalized cannabis. It seems more likely that additional states will legalize medical and adult-use cannabis, and societal acceptance of adult-use cannabis will increase with time. As an agribusiness center that has a highly trained workforce, we have a competitive advantage to produce, process, and distribute a legal product for which the demand is likely to increase in the coming years.
On September 30 at 5:30 PM in the theater of the Decatur Civic Center, the Decatur City Council will hold a special meeting to discuss and possibly vote on permitting adult-use cannabis businesses in Decatur. I encourage you to provide feedback so that I can make the best decision possible for those who now live in Decatur and those who will make Decatur their home in the future.