Oglesby residents have good reason to be excited about the coming expansion of Green Thumb Industries. The city is losing a chunk of change from the transfer of cement property to the state parks and GTI’s cash infusion could replace that missing revenue and then some.
But here’s a word of advice to the city: Bank on it only in the short term — don’t bet on a steady stream of cannabis revenue 10 years from now.
That may sound gloomy or flippant, but there are reasons to treat GTI as a short-term boon to the city rather than a long-term gain around which the city can anchor its fiscal future.
The debate over legalized cannabis bears some notable (and frankly unsettling) similarities to the debate we once had over gambling. Longtime residents will remember when gaming generally, and the lottery particularly, was pitched as a moneymaker for our schools. Not only has the money proven to be a drop in the bucket, but the mere premise of wealthier schools looks now like a swindle.
There are reasons to forecast a similar future for cannabis revenue. As the NewsTribune published earlier this year, lawmakers anticipate hundreds of millions, not billion, in direct revenue. That wouldn’t put a dent in our pension crisis. And what will happen to that revenue stream when cannabis ceases to be the flavor of the month and yields market share to another vice?
It is true that Oglesby stands to benefit from the indirect revenue of cannabis, which is to say the construction and taxation of facilities. GTI’s pledge of a $10.5 million investment will not necessarily translate into a $10.5 million increase to Oglesby’s tax base, but an eight-figure investment still figures to give the city a much-needed boost.
But for how long can Oglesby bank on cannabis revenue, directly or indirectly? It may only be a few years before GTI finds that market conditions have deteriorated and that fewer workers are needed. GTI then could go cup-in-hand to La Salle County’s Board of Review seeking property tax relief, as they did two years ago when the medical cannabis market failed to meet projections.
Oglesby should project only short-term gains from cannabis and hedge its bets accordingly. The city’s best option: General obligation bonds.
Oglesby could anticipate a reasonable sum to borrow, float bonds and then set an aggressive repayment schedule in case the well suddenly runs dry. The city has pressing needs that include infrastructure improvements, an upgrade of its electrical service and Senica Square. Short-term bonds would provide a means to fund these projects with a managed level of risk.
Get the bonds and get the pot money now. If GTI exceeds expectations and proves to be a durable moneymaker, then great, the city can renegotiate the borrowing terms and even talk about tax cuts or general fund infusion.
But a tandem of short-term borrowing and fiscal discipline would ensure the city won’t be left holding the bag if GTI founders or the market for pot suddenly changes.
Tom Collins can be reached at (815) 220-6930 or TCollins@shawmedia.com. Follow him on Twitter @NT_Court.