State Taxes on Recreational Marijuana

Medical use of marijuana has long been legal in many of the states. Such use requires a prescription from a doctor.

However, as of April 2024, 24 states have legalized recreational marijuana use—that is, the use of marijuana of a specified amount of marijuana for any purpose without a prescription. These states are Alaska, Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon, Rhode Island, Vermont, Virginia, and Washington. It is also legal in Washington, D.C.

State Taxation and Sales of Recreational Marijuana

Each state that has established a legal market for recreational marijuana imposes taxes on cultivation and sales. These vary significantly from state to state.

The three main types of taxes are the following:

• Excise taxes: Most states impose excise taxes on retail purchases of marijuana, similar to those on tobacco and alcohol. These taxes, which can be a percentage of the retail price or a flat rate per unit of weight (such as per ounce of cannabis flower or gram of concentrate), can be hefty, just like they are for cigarettes.
• Sales taxes: In most states, customers must pay the state sales tax, which is collected by the marijuana dispensary or retailer. Some states have established special state-wide sales tax rates for marijuana sales. In most states, cities and counties are allowed to charge additional local sales taxes on top of the state sales tax. These vary.
• Cultivation taxes: Some states also impose cultivation taxes that must be paid by marijuana growers, processors, and/or distributors. These are typically based on the weight of the marijuana or charged per plant. These taxes are paid by the cultivator, processor, or distributor, not the consumer. However, the cost of these taxes is passed on to customers in the form of higher prices.

FAQs on Recreational Marijuana Taxes

Here are some frequently asked questions regarding marijuana taxation.

What State Has the Highest Marijuana Tax?

As of late 2023, Washington has the highest marijuana excise tax rate at 37%.

What State Brings in the Most Revenue From Marijuana Taxes?

The U.S. Census Bureau provides an online tool showing quarterly cannabis tax data from 2021 to present. In the fourth quarter of 2023, Washington, Alaska, Colorado, and Montana brought in the most revenue from marijuana (shown as a percentage of their total tax revenue).

How Much is Colorado's Marijuana Tax?

Colorado has a 15% retail marijuana sales tax on all sales of retail marijuana and retail marijuana-infused products. See the Colorado Department of Revenue's Marijuana Sales Tax and Marijuana Taxes websites for more information.

How Much Does Michigan Tax Marijuana?

Michigan imposes an excise tax of 10% on retail marijuana sales in addition to a 6% sales tax. (See the Michigan Regulation and Taxation of Marihuana Act of 2018.) The Michigan Department of Licensing and Regulatory Affairs and the Michigan Department of Treasury handle marijuana tax administration in the state.

How Much Is Marijuana Tax in Illinois?

The Illinois tax rates for recreational marijuana are complicated. See the Illinois Department of Revenue website for more information.

Is Marijuana Taxed in Florida?

Medical marijuana is exempt from sales taxes in Florida. (In Florida, marijuana is illegal for recreational use. However, Florida Amendment 3, also called the "marijuana legalization initiative," is on the November 2024 ballot.)

Is Marijuana Tax-Free in California?

California imposes sales and use tax unless subject to a specific exemption.

How Much Is the Weed Tax in California?

California requires consumers to pay a 15% cannabis excise tax plus other state and local sales taxes.

What Is the Ohio Tax on Weed?

Ohio has a 10% excise tax plus sales taxes.

Chart of Marijuana Excise Taxes for Certain States

Marijuana excise taxes are as follows in the selected states shown below. (Keep in mind that additional taxes, such as sales and local taxes not shown in this chart, might also apply.)

More Information

To find more information and a chart showing the excise taxes consumers must pay when purchasing marijuana, go to the Tax Foundation's article Does Your State Tax Recreational Marijuana? You can also review the Federation of Tax Administrators article on State Taxation and Sales of Recreational Marijuana.