States have taken a variety of approaches to legalizing, regulating, and taxing cannabis — including the method and rate of taxation. On the high end of the tax burden are Alaska and Washington state. In Washington, the total tax on retail sales can be as high as 47.4% with local taxes factored in. Meanwhile, Alaska imposes a $50/ounce tax on cultivation, meaning the effective tax rate goes up as prices drop. If prices drop to $100/ounce at retail, it would amount to an effective tax burden of 50%. Some states, including California, have decreased their tax burden as legal businesses found it difficult to compete with illicit, unregulated sales.
Newer legalization states are increasingly focusing on displacing the illicit market and are typically imposing lower tax burdens at the point of retail sales, while exempting medical cannabis. In Delaware, Maryland, and Minnesota, which all passed in 2023 — taxes are imposed at retail and range from 9% total in Maryland to 15% total in Delaware.
Wholesale Excise Tax Rate
Retail Excise Tax Rate
Standard Sales Tax
(if sales tax applies to cannabis)
Local Sales Tax Rates
Applicable to Medical?
Flower: $50/oz ($25/oz. for abnormal bud) Trim: $15/oz
Some local cannabis- specific taxes
N/A — Medical law does not include sales.
5.6% Transaction Privilege Tax
Yes. Varies and can be up to 5.6%.
No, 5.6% tax applies to medical, plus optional 2-3% local tax
Standard local taxes of up to 3%; some local cannabis-specific taxes
Standard local taxes of up to 6%; some local cannabis- specific taxes
Registered patients are exempt from 15% retail excise tax, but most pay 2.9% standard sales tax
Flower: $0.00625/mg THC
Edibles: $0.0275/mg THC
Other products: $0.009/mg THC
3% payable to locality for specific purposes
Most Products: 20%
≥35% THC: 25%
Up to 3.5%
Medical is taxed at a 7% cultivation tax and a 1% pharmaceutical tax.
Flower or mature plants: $335/lb
Immature plants or seedling: $1.50
Medical sales are taxed at a lower rate —5.5% for flower, 8% for edibles
Local cannabis- specific taxes of up to 3%
Medical is not taxed
Medical has a lower rate: 3% excise sales tax plus 6% standard sales tax.
Standard local taxes of up to 2%
Standard local taxes of up to 5.76%
Medical sales are taxed at 4% at retail
No. Medical providers pay a 4% tax on gross cannabis sales.
15% of fair market value
Standard local taxes of up to 1.25%
Medical has a lower rate: 15% at wholesale, without the 10% retail tax.
Increases as prices drop: starts at 1.3 of 1% of average retail prices and can increase to $60/oz when retail prices are below $200/oz
Up to 2% on each transfer (grower to processor, processor to retailer, and retailer to customer)
Exempt from state taxes; local taxes of up to 2%
12% until July 2025; increases, maxing out at 18% in 2030
Gross receipts: 5.125% to 8.6875%, depending on location
Gross receipts: varies by location
No. Medical was taxed pre-adult-use legalization but will no longer be taxed.