DuPage County has missed out on 18 months of marijuana tax revenue – a potential loss of up to $4 million – from a failure to properly notify the state to collect the money on the county’s behalf.
County board members in October 2019 imposed a 3% retail tax on all sales of recreational marijuana in municipal areas of DuPage.
The ordinance directed the county clerk’s office to send a certified copy of the ordinance to the Illinois Department of Revenue so that the new tax could be collected. Under state legislation, the tax would have taken effect in July 2020.
After some raised questions about marijuana tax revenue coming in low, county officials learned last fall that the state’s revenue department never received the paperwork.
County Board Chairman Dan Cronin called it “a very serious and egregious error” that snuffed out a tax windfall generated by marijuana sales in the 10 dispensaries operating in DuPage. Details about the cost of the error came to light after officials did a full accounting of the potential loss.
“We believe the estimated amount of revenue lost is around $3 million to $4 million,” Cronin, an Elmhurst Republican, said during the May 10 board meeting. “Our state’s attorney believes that we cannot recoup those dollars as they were simply never collected.”
According to a board memo obtained by the Daily Herald, County Clerk Jean Kaczmarek’s office reported that a copy of the October 2019 ordinance was mailed to the Illinois Department of Revenue. However, the clerk’s office “was not able to provide any documentation indicating the ordinance was mailed or received” by the state agency.
“No such record would typically exist as our office’s standard practice is to send resolution and ordinance copies via first-class mail unless otherwise directed by the county board,” said Deputy Clerk Adam Johnson, according to the memo.
Cronin said it’s never been the practice of the board to tell another elected county official how to do a task.
“Mr. Johnson’s supposition that the clerk’s statutory duty suddenly somehow or other became the county board’s duty is preposterous,” he said.
Board member Sam Tornatore said a copy should have been sent through FedEx and “not sent first-class mail like you’re sending a Christmas card to Uncle Charlie.” The Roselle Republican joined other board members in balking at the apparent lack of a paper trail.
“There’s no record, no recollection, no receipt, not even a simple email indicating the clerk completed her duty as a duly elected county official,” Cronin said. “The deputy clerk maintains the office did send the ordinance to the state. The state does not know who sent it, to whom, when, was there an accompanying memo, cover letter, who dropped the letter off, what post office did it go to, none of the above. It just sounds like some sort of phantom occurrence.”
Kaczmarek, who did not attend the May 10 meeting, released a statement trading blame.
“Regardless of any issues with the initial ordinance mailing, DuPage County would not have lost a single dollar of revenue if Chairman Cronin’s office had followed up in any way on the cannabis tax implementation,” the Glen Ellyn Democrat said in the statement.
“Chairman Cronin’s administration failed to notice for well over a year that DuPage County was receiving no cannabis sales tax whatsoever and now he’s attempting to distract attention away from that failure.”
The county was receiving cannabis use tax dollars, which are distributed to all Illinois local governments based on population. In fiscal 2020, the county received $51,319.
“Because this was a new tax and IDOR does not share sales tax data, the finance department did not have bench marks to use for comparison as to whether the county was receiving the appropriate amount of tax revenue,” the county’s chief administrative officer wrote in the memo.
At a finance committee meeting in September, county board member Brian Krajewski asked why the reported revenue seemed particularly low. On May 10, the Downers Grove Republican called for an independent firm to do a “full-fledged” internal audit on what happened.
“Let’s make no mistake about it,” Krajewski said. “It was the clerk’s job to file this with Springfield.”
Shortly after learning the state didn’t have a copy, finance department staff members sent one via FedEx. The 3% retail tax on municipal sales began at the start of this year.
“Fact is that the day our finance department staff learned of this situation they acted to immediately and properly file the ordinance with the specific individual in the correct division of the State Department of Revenue,” Cronin said. “They saved their emails, their tracking numbers. They called to confirm receipt. In other words, they acted professionally.”
It wasn’t until April that the county received its first check from the state for $241,198 – the tax revenue generated by sales in the month of January alone. County officials used that check and tax data from Lake and Will Counties to estimate the revenue loss in DuPage.
Liz Chaplin, finance committee chair and a Downers Grove Democrat, said she wants the county auditor’s office to review what happened and give a report with suggestions on how to “shore up our policies.”
“I have all the confidence that they’re going to do a thorough review and come back to committee with very good recommendations for us moving forward,” she said.