Cannabis taxation rates by state range from about 6% to 37% in state excise tax on retail sales, and most legal states stack ordinary sales tax and local add-ons on top. Washington charges the highest state rate at 37%, Illinois reaches 25% on high-potency products, and Missouri, Maine and Michigan sit at the low end with 6% to 10% excise. Medical cannabis is taxed at a lower rate or exempt in many states, while hemp-derived CBD is generally taxed as an ordinary retail product.
Cannabis excise tax rates by state
Rates below are state-level adult-use figures current for 2025 and exclude local options, which commonly add 1% to 5%. Always confirm current numbers with your state revenue agency before relying on them.
- Washington: 37% excise at retail, and cannabis is exempt from state and local sales tax.
- Illinois: 10% for flower at or under 35% THC, 20% for concentrates, 25% for edibles, plus state and local sales tax.
- Colorado: 15% excise on wholesale cultivation plus a 15% retail marijuana sales tax.
- California: 15% excise plus sales tax and local business taxes.
- Nevada: 10% retail excise plus a 15% wholesale excise.
- Arizona: 16% excise plus transaction privilege tax and local rates.
- Oregon: 17% state retail tax with up to 3% local tax.
- Massachusetts and Rhode Island: 10% to 10.75% excise plus sales tax, for combined rates near 17% to 20%.
- Montana: 20% on adult-use sales and 4% on medical sales.
- Michigan: 10% excise plus 6% sales tax.
- Maine and Missouri: 10% and 6% excise plus sales tax.
- Maryland: 9% sales tax on adult-use cannabis with no separate excise.
How do states structure cannabis taxes?
Tax on retail price
Many states charge a percentage of the final sale price, which is simple to collect but rises along with shelf prices. Washington, Illinois, Arizona, Oregon and Nevada all use price-based retail excise taxes.
which state has the highest cannabis tax rate
Tax on wholesale weight or THC
Some states tax cannabis before it reaches the register. Alaska charges $50 per ounce at cultivation, New York taxes distributors by milligrams of THC, and Connecticut and New Jersey pair sales tax with THC-based or per-ounce excise.
Sales tax layered on top
In most states the excise tax does not replace sales tax. A Colorado shopper can see a 15% marijuana sales tax plus state and local sales tax on the same receipt.
Are CBD and hemp products taxed like cannabis?
Plain CBD and other non-intoxicating hemp products are usually taxed as ordinary retail goods, so buyers pay standard sales tax and no cannabis excise. States that legalized marijuana generally exempt hemp-derived CBD from cannabis excise taxes, though a growing number of states have added hemp-specific taxes or limits on intoxicating hemp-derived cannabinoids. That split is why a lab-tested CBD tincture and a THC gummy sold in the same city can carry very different tax treatment.
Why do cannabis tax rates change so often?
Legislatures adjust rates to keep legal prices competitive with the illicit market, to fund social equity programs, and to react to falling wholesale prices. California repealed its cultivation tax in 2022 after growers said it squeezed margins, while other states have raised excise rates to close budget gaps. Local governments add another layer, so the same product can be taxed differently two towns apart.
Frequently asked questions
Which state has the highest cannabis tax?
Washington has the highest single state excise tax at 37% of the retail price. Illinois reaches 25% on edibles and concentrates plus sales tax, and Rhode Island combines 10% excise, 7% sales tax and up to 3% local tax.
Do medical marijuana patients pay cannabis taxes?
In many states, medical patients pay reduced rates or none at all. New Jersey exempts medical cannabis sales, Colorado applies no state sales or retail marijuana tax on medical products, and Illinois charges 1% for registered patients.
Is CBD taxed like marijuana?
Generally no. Non-intoxicating hemp CBD follows ordinary sales tax rules and avoids state cannabis excise taxes in most legal states.
Does cannabis tax vary by city or county?
Yes. Municipal and county add-ons commonly run 1% to 5% or more, and some cities also charge business license or cultivation fees that lift the effective rate.