Tax on Cannabis in Illinois
If you buy cannabis in Illinois, you might be surprised by how much tax gets tacked on. Ever since Illinois made adult-use cannabis legal on January 1, 2020, the state has built one of the most tightly controlled—and taxed—markets in America. Taxes hit cannabis at every step: growing, wholesaling, and selling in stores.
Excise Tax on Cannabis
The major tax you’ll notice comes in the form of an excise tax. This tax is slapped on right as cannabis gets sold to you. The rate depends on how much THC is in the product:
- 10% for flowers and concentrates that have 35% THC or less.
- 25% for anything that hits over 35% THC.
- 20% for infused products, like edibles and beverages, that don’t come in the typical flower form.
This setup makes stronger products cost you more at the store, which is the point. The state wants to charge more for items that pack a bigger punch, both in effects and in demand.
Cultivation Privilege Tax Survival Guide
A hidden tax for every canna-grower in the state is the Cultivation Privilege Tax. It’s set at 7% and only kicks in when a grower sells cannabis for the first time to the adult-use market. Consumers won’t spot the tax line on their receipt, but it definitely heads straight to the shelf. Growers, like any business, factor in the cost and hand it to the dispensary, which means we all feel it when we check our total.
Sales Tax on Cannabis in Illinois
In Illinois, there’s a State Retailers’ Occupation Tax (ROT) of 6.25% on every cannabis sale. That’s just the start, though. Towns, cities, and counties can stack on their own taxes. Here’s a quick breakdown:
- Local taxes: Municipalities can charge up to 3% on cannabis.
- County taxes: Unincorporated areas can see an extra 3.75% tax.
So if you’re in Chicago or anywhere in Cook County, the combined excise, cultivation, and local taxes can push the total to more than 40% on every purchase. That’s a big hit to your wallet.
Medical Cannabis
Lucky for patients, medical cannabis is taxed a lot lighter. You’ll only pay about 1% on medical purchases, and local cannabis taxes don’t apply at all. This keeps the price tag on necessary medicine a little more manageable.
Conclusion
Cannabis shoppers in Illinois face a heavy tax load. Some people might end up paying more than 40% in taxes, depending on the strength of the THC in the product they buy and the local tax rates where they live. The extra taxes do mean higher prices at the dispensary, but the money goes to programs that help the state and the community, including funding for neighborhoods that felt the worst impact of the war on drugs. If you are unsure about the tax impact, reach out to Dimov Tax today. Our dedicated team stands ready to present professional support.