Updated as of July 1, 2025

Disclaimer: THC‑containing cannabis (over 0.3% Δ⁹‑THC) remains fully illegal in Indiana — no medical or adult‑use program exists, and therefore no cannabis‑specific excise, sales, or other taxes apply. This guide is informational only. Consult a licensed attorney or tax professional for advice.

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Key Points

  • Cannabis Status:
    • Possession, sale, and cultivation of THC‑containing cannabis are illegal under Indiana law (Class B misdemeanor for ≤30 g; felony beyond that).
    • A 2025 medical‑marijuana bill (HB 1178) was introduced but died in committee — no program exists.

  • Hemp & CBD:
    • Hemp (≤0.3% Δ⁹‑THC) is legal under the 2018 Farm Bill and regulated by Indiana’s Office of Indiana State Chemist & Seed Commissioner (OISC) via IC 15‑15‑13.
    • Hemp‑derived CBD products (≤0.3% Δ⁹‑THC) are legal but subject to standard state sales tax — 7% state rate plus local.

Understanding Indiana’s Cannabis “Tax” Structure

Because no legal cannabis market exists, all of the following are not applicable:

Tax/Requirement Status
State excise tax on cannabis N/A
State/local sales or gross‑receipts tax N/A
IRC 280E decoupling provisions N/A
Licensing, reporting, compliance N/A

CBD Regulations & Tax Codes

  1. Licensing (IC 15‑15‑13):
    All hemp growers and handlers (including CBD processors and retailers) must obtain an Indiana Hemp License via OISC’s online portal.

  2. Labeling & Testing:
    Since 2018, CBD products require on‑label QR codes linking to batch‑specific test results (per Indiana labeling rules). Retailers faced enforcement actions for non‑compliance early in 2024.

  3. Sales & Use Tax (IC 6‑2.5):

    • State rate: 7.0% on retail sales of tangible personal property, including hemp/CBD products.

    • Local option: Additional county/city rates (up to ~2.0%).

    • Exemptions: Limited to agricultural production inputs (seed, feed, fertilizer) — final hemp/CBD products do not qualify.

  4. Federal Tax (IRC 280E):

Enforcement & Penalties

  • Criminal Penalties (IC 35‑48‑4):
    Standard misdemeanor/felony penalties apply to cannabis violations — no tax penalties for cannabis since no lawful market exists.

  • Local Decriminalization:
    Cities like Indianapolis and Bloomington have ordinances reducing penalties for small‑amount possession — but do not legalize or tax cannabis.

Industry Trade and Advocacy Organizations

Government & Regulatory Contacts

This guide is current as of July 1, 2025. Laws and regulations can change rapidly—always verify before acting.