A Brief Guide to Understanding Cannabis Tax in Chicago
After alcohol, marijuana is the most commonly used mind-altering drug in the United States. Unlike alcohol, it is only legal for recreational use in some states.
Illinois became one of the states to legalize marijuana just a few years ago. Although this is good news for Chicagoans and other Illinois city dwellers, the cannabis tax made purchasing marijuana quite expensive.
Keep reading to understand the marijuana tax in Chicago.
Cannabis Possession in Chicago
Since January of 2020, adults aged 21 and over can possess cannabis and purchase cannabis products in Illinois. Possession is limited to the following:
- 30 grams of raw cannabis
- Cannabis products containing no more than 500mg of THC
- 5 grams of concentrated cannabis forms
Non-residents of Chicago, Illinois can purchase half of those amounts.
Taxes on Sales of Cannabis
In Illinois, the Cannabis Cultivation Privilege Tax imposes on cannabis cultivation at the rate of 7% of gross receipts. The Medical Cannabis Cultivation Privilege Tax has a rate of 7% of the sales price per ounce.
Windy City Cannabis Purchaser Excise Tax is imposed on purchasers who use cannabis, cannabis concentrate, cannabis-infused products, and cannabis flower.
Cannabis dispensaries in Chicago have to collect and remit cannabis tax depending on the level of THC. For example, 10% of the purchase price of adult-use cannabis is for products with a THC level of 35% or less.
In contrast, cannabis products with THC levels above 35% require a 25% tax on the purchase price. Adult-use cannabis-infused products are always taxed at 20% from a cannabis retailer.
Cannabis Cultivation Privilege Tax
To get more specific, the Cannabis Cultivation Privilege Tax is imposed on the cultivator. The cultivator is solely responsible to remit the tax on the first sale.
However, those subject to this tax can reimburse themselves for tax liability by stating the amount as an additional charge on a purchaser’s sales receipt.
Medical Cannabis Cultivation Privilege Tax
The medical cannabis cultivation privilege tax and the above tax share similarities as both rely on the responsibility of the cultivation center. This is not the responsibility of a dispensary or qualifying patient.
Those who are subject to this tax can also seek reimbursement for tax liability. The charge cannot be tax on an invoice.
Cannabis Purchaser Excise Tax
This is the tax in Chicago imposed on the purchaser. The cannabis retailer is responsible for collecting tax from the purchaser through the appropriate tax rates.
Purchasers who are not a cardholder for medical marijuana use are subject to marijuana tax collection. Cannabis taxes get collected by retailers by adding the tax amount to the total purchase price.
Buying marijuana in Illinois is a privilege which is why these taxes are in place. The tax from a dispensary will be its own item apart from the purchase price of cannabis products.
Are You Paying Cannabis Tax?
As a recreational purchaser of marijuana in Chicago, you are subject to cannabis tax. Luckily, you don’t have to pay extra money at the end of each year.
Much like buying other products, you are charged this tax on your receipt with the total price. The dispensary or retailer you buy from will be responsible for implementing this tax into their payment system.
For more articles on marijuana in places around the country, check out the other posts on our website.