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A Sneak Peek At The Cannabis Tax In Illinois

Joining the hands with other states for the Legalization of recreational cannabis along with medical cannabis, legislative authorities in Illinois bring forward a tiered tax structure. This effort makes more room for the cultivation of new revenue sources in the state. The tax implementation system in the cannabis industry of Illinois possesses a unique approach that tends to affect especially in specific areas of the industry.

It caters to different classes of cannabis products and different individuals differently in the industry, which explains how it works effectively for everyone. Different tax rates are levied at retail and wholesale levels. Also, tax rates are different for cultivators and purchasers. The tax rate also varies according to the amount of THC in the product. The higher the relative concentration of THC, the higher the tax rate will be.

On the contrary, medical marijuana users are exempted from most taxes to make their medical treatments hassle-free. All you need to do is get a medical card if you qualify according to the rules and regulations of Illinois. Stick around to learn more about all the ins and outs of cannabis tax in Illinois and how it works:

Cannabis Tax In Illinois:

To help you understand the cannabis tax in Illinois, here we break the taxation process into two different stages. The first one is the wholesale level, while the second one is the retail one.

  • Cannabis products are subject to a tax that makes about 7% at the wholesale level at the point where the Cultivation centers sell them after the completion of cultivation procedures.
  • However, when we talk about the cannabis taxes at the retail level, the authorities in Illinois seem to show quite a unique approach. It’s not a common “blanket” of taxes covering all areas of cannabis products equally. It’s more like a specific approach that imposes different taxes varying according to different factors such as relative potency and the type of cannabis products being sold. Also, THC concentration plays a substantial role in the taxes. The greater concentration of THC in the products, the higher the tax rate.

Several other taxes are imposed on cannabis in Illinois. These taxes include regular sales tax that makes 6.25% and other local ones that make almost 3.5%. Stick around to learn more about different types of tax levied on cannabis in Illinois according to the product type and their relative potency.

Different Types of Cannabis Tax In Illinois

The following taxes are due on cannabis if you live in Illinois. Here’s all you need to know:

  1. Cannabis Cultivation Privilege Tax:

The cannabis cultivation privilege tax is typically imposed on the cultivation of cannabis at the rate of 7% only. It takes about 7% of the gross receipts of the cannabis adult use by craft growers and cultivators.

  1. Medical Cannabis Privilege Tax

This fall under the types of taxes that are directly imposed on the privilege of cultivation of medical cannabis. This also makes 7% of the price of cannabis sales per ounce.

  1. Cannabis Purchaser Excise Tax

This tax is imposed on the privilege of having cannabis for use. It includes all forms of cannabis, i.e., cannabis flower, cannabis-infused products of different types, cannabis concentrates, and others. The tax must be imposed at all times on the retail sales of adult use of cannabis and shall be duly collected by the cannabis dispensaries in Illinois. The tax rate is as follows:

  • If the adjusted level of THC lies below 35% in a Cannabis product, the tax makes about 10% of the purchase price from a cannabis retailer for adult cannabis use.
  • Similarly, in the case of cannabis products with an adjusted THC level beyond 35%, the tax makes about 25% of the purchase price for the purchase from a cannabis retailer who deals in adult-use cannabis.
  • In the case of cannabis-infused products, the tax is 20% of the purchase price.
  1. Sales Tax

Sales tax is imposed on both adult-use cannabis and medical cannabis. We also call it Retailers’ occupation tax. Here’s how these taxes are different for medical cannabis and adult-use cannabis:

  • Medical Cannabis: When we talk about the Retailers’ occupational tax imposed on medical cannabis, it makes no more than the basic 1%, just like other qualifying drugs. Also, it’s completely exempted from other locally imposed taxes.
  • Adult-use cannabis: 6.25% of state retailers’ occupation tax is imposed on Adult use of cannabis. Unlike medical cannabis, other local retailers’ occupation taxes are levied on adult-use cannabis, which explains why getting a medical card can save you from taxes. The authorities may, at any time, impose local taxes through an ordinance on the people who are dealing in adult-use cannabis. (Note that medical cannabis is excluded from all such taxes that specifically address cannabis products). The municipal cannabis retailers’ occupation tax makes no more than 3%, while the county cannabis retailers’ occupation tax makes 3.75%, to be precise.

Who Stands Responsible For The Remittance of Cannabis Tax In Illinois?

The authorities impose several kinds of taxes on cannabis in Illinois. Now that you’re familiar with the types of taxes, it’s time to see which of them you stand responsible for. Here’s everything about the responsibility of remittance of cannabis taxes.

  1. Who has to pay the Cannabis cultivation privilege tax?

Cannabis cultivation privilege tax is the sole responsibility of the cultivator as it’s directly imposed on the cultivators. Also, it must be noted that the subsequent purchasers, infusers, and dispensing organizations aren’t responsible for paying this tax in any case. Thus, only those parties who are directly or indirectly indulged in the activity of cultivation of cannabis shall be liable for the payment of cannabis cultivation privilege tax. Such persons may at any time state the amount of their tax liability as an additional charge on the purchaser’s sales receipt.

  1. Who is responsible for the remittance of medical cannabis cultivation privilege tax?

The medical cannabis privilege tax is imposed just like the cannabis cultivation privilege tax. As by the name, the medical cannabis cultivation privilege tax is levied on the cultivators and all such parties directly or indirectly indulged in the cultivation of medical cannabis. In the case of medical cannabis, generally, cultivation centers are responsible for the payment of taxes. Also, remember that the qualifying patients and dispensing organizations are completely free from all liabilities of payment of medical cannabis cultivation privilege tax. The key difference is that no parties liable for the payment of taxes shall state an amount as a charge for reimbursement on an invoice as tax.

  1. Who is responsible for the remittance of Cannabis purchaser excise tax?

Cannabis purchaser excise tax is imposed on the cannabis purchasers; thus, they are responsible for the payment. However, the responsibility for the collection of the tax is imposed on the retailer. The retailer must collect the taxes at the appropriate rates, as may be fixed by the authorities. After collection, the taxes are remitted. Also, this amount must be. Distinctly states as tax to inform the purchaser and distinguish the amount from the purchase price of cannabis. The tax amount is calculated separately and added to the price of cannabis flowers, cannabis-infused products, or concentrates.

Can Medical Card Help You Get Away With Cannabis Tax in Illinois?

If you’re a recreational user, your cannabis dealings cost you way more than an individual who’s a qualified medical cannabis user. Whether you realize it or not, cannabis taxes in Illinois greatly increase the price of final cannabis products for the purchasers.

Well, getting a medical card can cost you a few bucks as the registration fees, which is why many people impulsively decide that it’s not a good idea. They hardly realize that investing some funds in a medical card beforehand helps them get away with several taxes. Here’s the list of taxes you can avoid if you have a medical marijuana card in Illinois.

  • Firstly, adult cannabis users have to pay a Cannabis sales tax that makes up to 6.25%. If you get a medical card, you’re completely free from this. All you have to pay is a flat 1% Sales tax on all kinds of products.
  • Another tax called purchaser tax applies to cannabis products according to the potency of THC in the product. This tax is also waived off if you have a medical card.

Get a medical card and say goodbye to all the cannabis taxes that other recreational users have to pay in Illinois. 

Final Thoughts:

Cannabis tax in Illinois can make the final price relatively higher and cost you several bucks more than without them. Several kinds of taxes are levied on cannabis products by the authorities. However, medical marijuana users are exempted from most of these taxes, which explains how getting a medical marijuana card can help you save several bucks every time you shop for cannabis for medical uses.

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