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, Minnesota, and Ohio, which all passed in 2023 — taxes are imposed at retail and range from 9% total in Maryland to 16% total in Ohio.
State
Wholesale Excise Tax Rate
Retail Excise Tax Rate
Standard Sales Tax
(if sales tax applies to cannabis)
Local Sales Tax Rates
Applicable to Medical?
Alaska
Flower: $50/oz ($25/oz. for abnormal bud) Trim: $15/oz
N/A
N/A
Some local cannabis- specific taxes
N/A — Medical law does not include sales.
Arizona
N/A
16%
5.6% Transaction Privilege Tax
Yes. Varies and can be up to 5.6%.
No, abut the 5.6% tax applies to medical, plus optional 2-3% local tax
California
N/A
15%
7.25%
Standard local taxes of up to 3%; some local cannabis-specific taxes
Partially, the 15% retail excise tax applies. Sales taxes do not apply to registered patients.
Colorado
15%
15%
N/A
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
Conn.
N/A
Flower: $0.00625/mg THC
Edibles: $0.0275/mg THC
Other products: $0.009/mg THC
6.35%
3% payable to locality for specific purposes
No, medical cannabis is not taxed
Delaware
N/A
15%
N/A
N/A
No, medical cannabis is not taxed
Illinois
7%
Flower: 10%
Most Products: 20%
≥35% THC: 25%
6.35%
Up to 3.5%
Medical is taxed at a 7% cultivation tax and a 1% pharmaceutical tax.
Maine
Flower or mature plants: $335/lb
Trim: $94/lb
Immature plants or seedling: $1.50
Seed: $0.30
10%
N/A
N/A
Medical sales are taxed at a lower rate —5.5% for flower, 8% for edibles
Maryland
N/A
9%
N/A
N/A
No, medical cannabis is not taxed
Mass.
N/A
10.75%
6.25%
Local cannabis- specific taxes of up to 3%
No, medical cannabis is not taxed
Michigan
N/A
10%
6%
N/A
Medical has a lower rate: 3% excise sales tax plus 6% standard sales tax.
Minn.
N/A
10% initially
6.875%
Standard local taxes of up to 2%
No, medical cannabis is not taxed
Missouri
N/A
6%
4.225%
Standard local taxes of up to 5.76%
Medical sales are taxed at 4% at retail
Montana
N/A
20%
N/A
N/A
No. Medical providers pay a 4% tax on gross cannabis sales.
Nevada
15% of fair market value
10%
6.85%
Standard local taxes of up to 1.25%
Medical has a lower rate: 15% at wholesale, with the 10% retail tax waived.
New Jersey
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
N/A
6.625%
Up to 2% on each transfer (grower to processor, processor to retailer, and retailer to customer)
No, medical cannabis is not taxed
New Mexico
N/A
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 is will longer be taxed.
