Cannabis tax rates in different states: the short answer
State cannabis excise taxes run from roughly 10% to 37% at the retail level, and nearly every legal state adds its standard sales tax on top of that. A handful of states tax by weight or by THC potency instead of by price. Local governments in California, Illinois, Massachusetts, and New York can stack their own surtax on top of the state rate. The total you pay at the register often lands between 20% and 40% above the menu price.
The four tax structures you will run into
- Retail excise tax: a percentage added to the shelf price. Washington and Oregon use this model.
- Wholesale excise tax: charged to the cultivator or processor, then folded into the price you see at the register. Colorado applies its rate at the wholesale level.
- Weight-based tax: a flat dollar amount per ounce of flower or trim. Alaska has used this approach.
- Potency-based tax: a rate tied to THC percentage or milligrams per package. Illinois and New York apply tiered rates like this.
Most states stack two or three of these on top of the ordinary sales tax, so a single shelf price is rarely the final price.
Cannabis Taxation Rates by State: How Each Market Taxes Weed and CBD
How to estimate the real cost in any state
Prerequisites: the shelf price of the product, the state cannabis excise rate, the general state sales tax rate, and any city or county cannabis surtax.
- Write down the menu price of the item you want to buy.
- Look up the state cannabis excise rate on the state revenue department website.
- Add the general state sales tax rate for that state.
- Add any local cannabis surtax that applies to the city or county.
- Multiply the menu price by the combined rate you just totaled.
- Add that tax figure to the menu price to get your out-the-door total.
- Run the same math on a medical product, since many states tax medical cannabis at a lower rate or exempt it.
Example rates to compare
- Washington: 37% excise tax on retail sales.
- Colorado: 15% wholesale excise tax plus a 15% retail marijuana sales tax, plus local add-ons.
- California: 15% excise tax plus state and local sales tax.
- Nevada: 10% wholesale excise plus 10% retail excise.
- Illinois: 10% to 25% depending on THC content, plus 6.25% state sales tax and local taxes.
- Michigan: 10% excise plus 6% sales tax.
- Massachusetts: 10.75% excise plus 6.25% sales tax plus up to 3% local.
- New York: 13% excise split between state and local, plus local sales tax.
Rates change with each legislative session. Confirm the current figure with the state revenue department before you budget for a purchase.
State-Wise Cannabis Tax Rates: How Excise and Sales Taxes Work
What this means for CBD shoppers
Hemp-derived CBD sold outside a licensed cannabis dispensary usually falls under ordinary sales tax rules rather than state cannabis excise taxes, and some states exempt supplements or food products from sales tax altogether. A few states have started applying cannabis-style excise taxes to intoxicating hemp products, so check the product category as well as the store type.
Common mistakes
- Using one state's rate to guess another state's total.
- Forgetting that local surtaxes vary by city and county.
- Assuming medical and adult-use products carry the same rate.
- Reading an outdated rate from a blog post instead of the revenue department page.