Taxation of Cannabis
Tax & AccountingMarch 09, 2021

Multistate Sales Tax on Cannabis

This chart indicates whether cannabis sold legally for medical or recreational use is subject to sales tax.

 

STATE CANNABIS COMMENTS CITATION
Alabama N/A
 
Arizona Taxable

Medical marijuana is subject to general state sales tax, as well as any applicable city or county taxes.

Adult use (non-medical) marijuana is subject to state and local general sales and use tax. Additionally, it is subject to a 16% state marijuana excise tax.

We recommend you reference cited authority for more information.

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

A 4% medical marijuana special privilege tax is imposed on gross receipts from sales of usable marijuana by a cultivation facility, dispensary, or other marijuana business. A sale of usable marijuana is also subject to state and local sales taxes at the same rate as other tangible personal property. The 4% special privilege tax is scheduled to expire on July 1, 2021.

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.

In addition, a 15% excise tax is imposed upon purchasers of all marijuana and marijuana products, and a cultivation tax is imposed on marijuana cultivators as follows:

  • $9.65 per dry-weight ounce
    of cannabis flowers
  • $2.87 per dry-weight ounce of cannabis leaves; and
  • $1.35 per ounce of fresh cannabis plant

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 marijuana is subject to general sales tax.

Retail (recreational) marijuana and marijuana 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 marijuana is also subject to a 15% excise tax on the Average Market Rate or contract price of retail marijuana.

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

Sales of medical marijuana by licensed dispensaries are subject to sales and use taxes.

We recommend you reference cited authority for more information.

Special Notice
2012(5)
District of Columbia Not Taxable

Federal law prohibits the sale of marijuana.

We recommend you reference cited authority for more information.

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

Medical marijuana and marijuana delivery devices are exempt from sales and use tax.

We recommend you reference cited authority for more information.

Fla. Stat.
§212.08(2)(l)
Georgia N/A    
Hawaii Yes

Exemption for prescription drugs does not apply to medical marijuana or manufactured medical marijuana product.

We recommend you reference cited authority for more information.

Haw. Rev. Stat.
§237-24.3(6)
Idaho N/A    
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 6.25% 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 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
Indiana N/A    
Iowa N/A     
Kansas N/A    
Kentucky N/A    
Louisiana N/A Louisiana imposes an excise tax on marijuana and controlled dangerous
substances and industrial hemp-derived CBD products.
 
Maine Taxable

Medical marijuana is subject to sales tax at the state rate. Retail sales of adult use recreational marijuana, 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. Me. Rev. Stat. Ann.
tit. 36, §1760(5)
Massachusetts   Taxable

Retail marijuana sales are subject to the 6.25% state sales tax, 10.75% state excise tax, and up to 3% local option tax.

Medical marijuana 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

Medical marijuana is subject to sales tax. For sales of recreational marijuana, a 10% excise tax is also imposed on retail sales by retailers and microbusinesses. The sales price subject to sales tax includes the 10% excise tax.

We recommend you reference cited authority for more information.

Mich. Comp. Laws
§333.27601 
 Minnesota N/A 

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
 Mississippi  N/A  
 Missouri  Taxable

A 4% tax is imposed on retail sales of marijuana for medical use that are sold at medical marijuana 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
Nebraska  N/A  
Nevada Taxable

Marijuana is subject to:

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

Medical marijuana users are exempt from paying the 10% retail excise tax.

We recommend you reference cited authority for more information. 

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 4%. The rate will be reduced to:

  • 2% beginning July 1, 2021, and
  • 0% (completely exempt) beginning July 1, 2022

New Jersey voters approved a constitutional amendment that legalizes the recreational (nonmedical) use of marijuana, also known as 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.

We recommend you reference cited authority for more information. 

N.J. Stat. Ann.
§54:32B-3(a), TB-68
New Mexico  Taxable    N.M. Stat. Ann. §7-9-4
 New York  Exempt

Sales of medical marijuana and related products purchased to administer medical marijuana are exempt from sales tax.

Instead, an excise tax is imposed on the gross receipts from the sale of medical marijuana by a registered organization to certified patients and designated caregivers.

We recommend you reference cited authority for more information.

TSB-M-16(1)M
North Carolina See comment

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


North Dakota N/A    
Ohio Taxable Medical marijuana is subject to sales tax. Ohio Rev. Code Ann.
§5739.01
Oklahoma Taxable

Sales of medical marijuana and medical marijuana products are subject to:

  • a 7% gross receipts tax, and
  • state and local sales taxes

We recommend you reference cited authority for more information.

Okla. Admin. Code
§710:65-19-216
Pennsylvania  Exempt

Gross receipts tax imposed on growers/processors.

We recommend you reference cited authority for more information. 

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 a15% 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 marijuana, it is subject to the unauthorized substances tax.  
Texas  N/A    
Utah  Exempt

The sale by a licensed medical cannabis pharmacy of the following is exempt:

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

However, the sale of a medical cannabis device by a medical cannabis pharmacy is taxable.

We recommend you reference cited authority for more information.

Utah Code Ann. §59-
12-104.10
 Virginia  Exempt

Virginia does not allow the sale of cannabis/marijuana unless it is done through a physician's prescription, which is exempt from sales tax.

We recommend you reference cited authority for more information.

23 Va. Admin. Code
§10-210-940,

Unofficial Department Guidance

Washington  Taxable

Sales of recreational and medical marijuana are subject to tax at the general rate. Certain exemptions are available to retailers with medical marijuana endorsements.

A 37% marijuana excise tax is imposed on the buyer in addition to the sales tax. The excise tax is not part of the total retail price to which the sales tax applies.

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  

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. No identification cards may be issued to patients authorizing access to medical cannabis until July 1, 2019. Medical cannabis shall not be subject to a sales tax.

We recommend you reference cited authority for more information.

W. Va. Code §16A-9-
1
Wisconsin N/A     
 Wyoming N/A     
Source: Wolters Kluwer CCH® AnswerConnect, 2021
Permission for use granted.
Carol Kokins-Graves
Senior Content Management Analyst

Carol Kokinis-Graves, an attorney, is a senior content management analyst in the Indirect Tax Group at Wolters Kluwer Tax & Accounting. She has spent more than 23 years analyzing and reporting state and local sales and use tax legislation, court cases, department of revenue rulings, and regulations. Carol is a speaker on state and local tax issues and has been quoted in top media publications, including Forbes, NBC News, The Los Angeles Times, and USA Today.