Multistate Sales Tax on Cannabis – Lexology

Alabama See comment However, Alabama does have an illegal drug tax, which is an excise tax on illegal possession, distribution, sales, use, and other transactions involving certain drugs or controlled substances. We recommend you contact Alabama Department of Revenue for more information.   Arizona Taxable

Medical cannabis is subject to general state sales tax, as well as any applicable city or county taxes. Adult use (non-medical) cannabis is subject to state and local general sales and use tax. Additionally, it is subject to a 16% state cannabis excise tax. We recommend you reference cited authority for more information.

Ariz. Rev. Stat. §42- 5010 Arkansas See comment

A sale of usable cannabis is subject to state and local sales taxes at the same rate as other tangible personal property. We recommend you reference cited authority for more information.

Ark. Code Ann. §26- 57-1504 California Taxable

Sales and use tax applies to retail sales of cannabis and cannabis products. A sales and use tax exemption applies to retail sales of medical cannabis, medical cannabis concentrate, edible medical cannabis products, and topical cannabis, as defined. We recommend you reference cited authority for more information.

Cal. Rev. & Tax. Code §34011, Cal. Rev. & Tax. Code §34012, Special Notice L-481, California State Board of Equalization, October 2016, Tax Guide for Medical Cannabis Businesses, California State Board of Equalization, November 2016 Colorado Taxable

Medical cannabis is subject to general sales tax. Retail (recreational) cannabis and cannabis infused products are subject to a 15% state retail marijuana sales tax, but exempt from the general sales tax. It is also subject to any applicable local option retail tax. Retail cannabis is also subject to a 15% excise tax on the Average Market Rate or contract price of retail cannabis. We recommend you reference cited authority for more information.

Colo. Rev. Stat. §39-26-104(1)(a), Colo. Rev. Stat. § 39-28.8-202 Connecticut Taxable

Effective July 1, 2021, a state tax is imposed on retail sales of cannabis, cannabis plant material, and cannabis edible products by a cannabis or hybrid retailer or micro-cultivator, with certain exceptions. The tax rate is based on the product’s type and total THC reflected on its label as follows:

• 0.625 cents per milligram of total THC for cannabis plant material;
• 2.75 cents per milligram of total THC for cannabis edible products (i.e., products containing cannabis or cannabis concentrate, combined with other ingredients, that are intended to be ingested, including sublingual or oral absorption); and
• 0.9 cents per milligram of total THC for cannabis, other than cannabis plant material or cannabis edible products.

In addition, a 3% municipal sales tax is imposed on the gross receipts from the sale of cannabis by a cannabis or hybrid retailer or micro-cultivator that must be administered in accordance with the state sales and use tax law. Lastly, palliative cannabis is considered a nonprescription drug and is exempt from sales and use tax. We recommend you reference cited authority for more information.

  District of Columbia Not Taxable

We recommend you reference cited authority for more information.

D.C. Code Ann. §47- 2002(a)(7) Florida Exempt

We recommend you reference cited authority for more information.

Fla. Stat. §212.08(2)(l) Georgia N/A     Hawaii Taxable   Haw. Rev. Stat. §237-24.3(6) Idaho N/A However, Idaho has an illegal drug stamp excise tax. We recommend you reference cited authority for more information. Idaho Code §63-4203, Idaho Code §63-4205 Illinois Taxable

Both medical cannabis and adult use cannabis are subject to the retailers’ occupation tax. Medical cannabis is subject to state and local retailers’ occupation taxes at the same rate as other qualifying drugs, i.e., 1% state rate and is generally exempt from locally imposed retailers’ occupation taxes (except for Regional Transportation Authority and Metro-East Transit District retailers’ occupation taxes). Adult use cannabis is subject to the state retailers’ occupation tax as well as local retailers’ occupation taxes in the same manner as other general merchandise. In addition, counties and municipalities may impose a local cannabis retailers’ occupation tax on retail sales of cannabis, other than medical cannabis, at specified rates. Further, the following other types of taxes are due on sales of cannabis: cannabis cultivation privilege tax; medical cannabis cultivation privilege tax; and cannabis purchaser excise tax. We recommend you reference cited authority for more information.

35 ILCS 120/2-10, Informational Bulletin FY 2020-12, Informational Bulletin FY 2020-16, Cannabis Tax Frequently Asked Questions Indiana N/A     Iowa N/A Medical cannabis (CBD oil with less than 3% THC) is subject to state sales tax.   Kansas N/A     Kentucky N/A     Louisiana N/A Louisiana imposes an excise tax on cannabis and controlled dangerous substances and industrial hemp-derived CBD products.   Maine Taxable

Medical cannabis is subject to sales tax at the state rate. Retail sales of adult use recreational cannabis, permissible as of May 2, 2018, will be subject to a special tax rate of 10%. We recommend you reference cited authority for more information.

Me. Rev. Stat. Ann. tit. 36, §1760(5) Maryland Exempt We recommend you reference cited authority for more information. Md. Code Regs. 03.06.01.09 Massachusetts Taxable

Retail cannabis sales are subject to the 6.25% state sales tax, 10.75% state excise tax, and up to 3% local option tax. Medical cannabis sold to a qualified purchaser is not subject to tax. We recommend you reference cited authority for more information.

Mass. Gen. Laws ch. 64H, §6(l) Michigan Taxable   Mich. Comp. Laws §333.27601 Minnesota See comments

Medical cannabis is not subject to sales tax. Sales of non-medical marijuana or non-medical cannabis are subject to the general sales tax rate plus applicable local taxes even though it is currently unlawful to sell non-medical marijuana/non-medical cannabis. Also, cannabis is subject to the cannabis and controlled substances excise tax. any illegal cannabis or controlled substance must have a cannabis or controlled substance stamp on the package, purchased from the Department of Revenue. Cannabidiol (CBD) products are subject to sales tax regardless of how they are sold. We recommend you reference cited authority for more information.

CBD Products and Sales Tax, Tax Information on Medical Cannabis, Marijuana and Controlled Substance Tax, Minn. Stat. §297A.61(3) and (4), Minn. Stat. §297D.08, Unofficial department guidance Mississippi N/A     Missouri Taxable

In addition to imposing sales and use tax on medical cannabis, a 4% medical cannabis tax is imposed on retail sales of cannabis for medical use that are sold at medical cannabis dispensary facilities in Missouri. We recommend you reference cited authority for more information.

Sec. 1, Article XIV, Missouri Constitution, Medical Marijuana, Missouri Department of Revenue Nevada Taxable

• a wholesale cannabis tax of 15% on the fair market value at wholesale (set by the Dept. every 6 months);
• a retail cannabis tax of 10% on adult-use sales of cannabis and cannabis products

Nev. Rev. Stat. §372.105 New Jersey Taxable The sales tax on medical cannabis dispensed by a medical cannabis dispensary or clinical registrant is being phased out. Currently, the rate is 2%. The rate will be reduced to 0% (completely exempt) beginning July 1, 2022. New Jersey voters approved a constitutional amendment that legalizes the recreational (non-medical) use of cannabis, by adults who are 21 years of age or older, effective January 1, 2021. All retail sales of cannabis products in the new adult cannabis market are only subject to the state’s sales tax. Optional social equity excise fee: An optional social equity excise fee can be imposed by the Cannabis Regulatory Commission on personal use cultivation activities by licensed cannabis cultivators, including those alternative treatment centers deemed to be, and actually issued, cultivation licenses. Medical cannabis cultivation activities would not be subject to the excise fee. Also, any sale by a cannabis cultivator for which the excise fee is imposed would be exempt from sales and use tax. Optional local cannabis transfer tax and user tax: A municipality may adopt an ordinance imposing a transfer tax on the sale of cannabis or cannabis items by a cannabis establishment that is located in the municipality. A local tax ordinance adopted must also include provisions for imposing a user tax, at the equivalent transfer tax rates, on any concurrent license holder operating more than one cannabis establishment. Any transaction for which the transfer tax or user tax is imposed, or could be imposed, other than those which generate receipts from the retail sales by cannabis retailers, are exempt from the sales and use tax. We recommend you reference cited authority for more information. N.J. Stat. Ann. §54:32B-3(a), TB-68, TB-104, New Jersey Constitution, Article IV, Sec. VII, Paragraph 13, Ch. 16 (A.B. 21), Laws 2021 New Mexico Taxable Medical cannabis is currently subject to gross receipts tax. Recreational cannabis also legalized with commercial sales beginning no later than April 1, 2022; gross receipts tax will apply. We recommend you reference cited authority for more information. N.M. Stat. Ann. §7-9-4 New York Exempt

Sales of medical cannabis and related products purchased to administer medical cannabis are exempt from sales tax. Instead, an excise tax is imposed on the gross receipts from the sale of medical cannabis by a registered organization to certified patients and designated caregivers. Effective April 1, 2022, sales of adult-use cannabis products are also exempt from sales and use tax. Instead, adult-use cannabis is subject to a retail level excise tax of 13% (9% state excise tax and 4% local excise tax) and an excise tax imposed and collected by distributors based on potency measured by the milligrams of THC (the active ingredient in cannabis) in the product, with different rates depending on final product type. We recommend you reference cited authority for more information.

N.Y. Tax Law, §490, N.Y. Tax Law, §492, N.Y. Tax Law, §493, TSB-M-16(1)M North Carolina See comment

While there is no sales and use tax levied on cannabis, it is subject to the excise tax on controlled substances and cannabis.

  North Dakota N/A     Oklahoma Taxable   Okla. Admin. Code §710:65-19-216 Pennsylvania Exempt   35 P.S. §10231.901(e) Rhode Island Taxable   R.I. Gen. Laws §44- 18-7(15) South Carolina N/A     South Dakota See comments

On November 3, 2020, voters approved Initiated Measure 26, Medical Marijuana Initiative, allowing for legalization of medical marijuana. Voters also passed Constitutional Amendment A, Marijuana Legalization Initiative, allowing for the legalization and taxation of adult-use (recreational) marijuana to be subject to a 15% excise tax. South Dakota is currently working on implementation rules. Additionally, there is a case pending before the South Dakota Supreme Court on the constitutionality of the amendment allowing recreational marijuana

  Tennessee See comment While there is no sales and use tax levied on cannabis, it is subject to the unauthorized substances tax.   Texas N/A     Utah Exempt

• cannabis in a medicinal dosage form; or
• a cannabis product in a medicinal dosage form

Utah Code Ann. §59- 12-104.10 Vermont Exempt Effective March 1, 2022, a cannabis excise tax of 14% of the sales price of each retail sale in Vermont is imposed on cannabis and cannabis products, including food or beverages. We recommend you reference cited authority for more information. Vt. Stat. Ann. tit. 7, §7902, Vt. Stat. Ann. tit. 32, §9771, Vt. Stat. Ann. tit. 32, §9773, Unofficial Department guidance Virginia Exempt

Sales of cannabis made through a physician’s prescription are exempt from sales and use tax. Effective January 1, 2024, in addition to the sales and use tax, an excise tax of 21% is imposed on the sale in Virginia of any retail cannabis, retail cannabis products, cannabis paraphernalia sold by a retail cannabis store, non-retail cannabis, and non-retail cannabis products. Any locality may by ordinance impose a 3% tax on any sale taxable under the state cannabis tax. We recommend you reference cited authority for more information.

23 Va. Admin. Code §10-210-940, Va. Code Ann. §4.1-1003, 2021 Legislative Summary (P.D. 21-79), Unofficial Department Guidance

Washington Taxable

Sales of recreational and medical cannabis are subject to tax at the general rate. Certain exemptions are available to retailers with medical cannabis endorsements. We recommend you reference cited authority for more information.

Wash. Rev. Code §69.50.535, Wash. Rev. Code §82.08.9998, Special Notice West Virginia See comment

A special medical cannabis tax is imposed at rate of 10% of gross receipts received by a grower/processor on sales to a dispensary. Tax is charged against and paid quarterly by the grower/processor. A sales tax may not be imposed on medical cannabis. We recommend you reference cited authority for more information.

W. Va. Code §16A-9- 1 Wisconsin Taxable Cannabidiol (CBD) and hemp products taxed as tangible personal property. Products may be exempt if they are food or food ingredients. We recommend you reference cited authority for more information. Wis. Stat. §77.52(1)(a), Wis. Stat. §77.54(20n)(a) Wyoming N/A