Medical use of marijuana has long been legal in a majority of the states; such use requires a prescription from a doctor. But in a growing national trend, 18 states have acted to legalize recreational marijuana use—that is, the use of a specified amount for any purpose without a prescription. These states are:
Eleven of these states have established legal markets where customers can purchase marijuana from state-licensed marijuana dispensaries or retailers. Connecticut, New Jersey, New Mexico, New York, Montana, Vermont, and Virginia have not yet implemented a legal market. The District of Columbia legalized marijuana in 2014, but Congress prevents it from implementing the law. South Dakota voters approved a marijuana legalization initiative in 2020, but it is being challenged in state courts.
Each state that has established a legal market for recreational marijuana imposes its own taxes on cultivation and sales.
Taxes on the cultivation and sales of recreational marijuana vary greatly from state to state. The three main types of taxes are:
The following chart shows the excise and sales taxes consumers must pay when purchasing marijuana. The retailer adds these taxes to the total price and then sends the money to the appropriate state and local tax agencies. For example, recreational marijuana sellers in Arizona must charge customers a 16% excise tax plus a 5.6% states sales tax for a 21.6% total tax.
|
State |
Tax Rate |
|
Alaska |
5% excise tax in Anchorage, Mat-Su Borough, Fairbanks, and Ketchikan; 3% excise tax in Juneau |
|
Arizona |
16% excise tax 5.6% state sales tax |
|
California |
15% excise tax 7.25% state sales tax 1%-15% local sales tax |
|
Colorado |
15% excise tax |
|
Illinois |
20% excise tax on infused food and beverages 10% excise tax on all other cannabis products with 35% or less THC 25% excise tax on all other cannabis products with more than 35% THC 6.25% state sales tax up to 3% local sales tax |
|
Maine |
10% excise tax 5.5% state sales tax |
|
Massachusetts |
10.75% excise tax 6.25% state sales tax up to 3% local excise tax |
|
Michigan |
10% excise tax 6% state sales tax |
|
Nevada |
15% excise tax 4.6% state sales tax |
|
Oregon |
17% excise tax 3% local tax |
|
Washington |
37% excise tax 6.5% state sales tax 0.5%-3.9% local sales tax |
The following chart shows the cultivation taxes that recreational marijuana producers must pay in each state. Producers must pay these taxes out of their own pockets. They may then pass the cost on to consumers in the form of higher prices.
|
State
|
Tax Rate
|
|
Alaska
|
$50/oz. mature flowers
$25/oz. immature flowers and buds
$15/oz. stems and leaves
$1 per clone
|
|
California
|
$9.65/oz. flowers
$2.87/oz. leaves
$1.35/oz. fresh plant
|
|
Maine
|
$335/lb. flowers and mature plants $94/lb. trim $1.5 per immature plant or seedling $0.3 per seed |