Updated July 1, 2025
Key Points for Cannabis Retailers
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Cultivation Privilege Tax – Cultivators owe 7 % of gross receipts on the first wholesale sale of both adult‑use and medical cannabis (per ounce for medical).
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Purchaser Excise Tax – Dispensaries must collect a tiered excise tax at retail on adult‑use products:
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10 % on flower/concentrates with THC ≤ 35 %
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25 % on flower/concentrates with THC > 35 %
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20 % on all cannabis‑infused products (edibles, beverages, etc.)
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Medical Cannabis – No purchaser excise tax on medical sales. Cultivation privilege tax still applies.
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Sales (Retailers’) Occupation Tax
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Adult‑Use – 6.25 % state rate + any local general merchandise ROT.
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Medical – 1 % state ROT, generally exempt from locally imposed cannabis‑specific occupation taxes (except certain transit districts).
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Local Cannabis‑Specific Taxes (Adult‑Use only) – Municipalities may add up to 3 %; counties up to 3.75 % in unincorporated areas (3 % inside municipalities).
Understanding Illinois’ Cannabis Tax Structure
280E Decoupling
Illinois fully decoupled from federal IRC §280E for state income tax in January 2023, allowing the deduction of ordinary business expenses (rent, payroll, marketing) on state returns.
Illinois Tax Overview
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Excise Tax – 7 % cultivation privilege + tiered purchaser excise (10 / 20 / 25 %).
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Sales/Retailers Occupation Tax – 6.25 % state ROT; adult‑use also subject to local general ROT + cannabis‑specific ROT.
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Medical – Exempt from purchaser excise; pays 1 % state ROT only. Documentation (registry card) required at point of sale.
Cannabis Excise Tax: What Retailers Need to Know
| Product Type | State Cultivation Tax | Retailer Excise Tax | Applies to Medical? |
|---|---|---|---|
| Adult‐use flower/concentrates ≤ 35 % THC | 7 % of wholesale | 10 % of retail price | No |
| Adult‐use flower/concentrates > 35 % THC | 7 % of wholesale | 25 % of retail price | No |
| All cannabis‑infused products | 7 % of wholesale | 20 % of retail price | No |
| Medical cannabis | 7 % of wholesale | 0 % | Yes |
Cultivation tax is remitted by cultivators on first sale; purchaser excise remitted by dispensaries.
Sales / Gross Receipts Tax: Local Impact on Cannabis
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State Rate – 6.25 % on adult‐use; 1 % on medical.
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Municipal Cannabis Retailers’ Occupation Tax (up to 3 %).
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County Cannabis Retailers’ Occupation Tax (up to 3.75 % unincorporated; 3 % inside municipalities).
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Chicago Example: 3 % cannabis retail tax + 6.25 % state + any city general sales tax.
Note: Springfield and many downstate jurisdictions do not currently impose a cannabis‑specific tax; always verify via MyTax Illinois Tax Rate Finder.
Filing & Payment Deadlines
| Tax Type | Filing Frequency | Due Date |
|---|---|---|
| Cultivation Privilege | Monthly (cultivators) | 20th of following month |
| Purchaser Excise | Monthly (dispensaries) | 20th of following month (Form CD‑1) |
| Sales/ROT (Form ST‑1) | Monthly or Quarterly | 20th of following month/quarter |
| State Income Tax | Annually | April 15, 2026 |
All cannabis tax returns must be e‑filed via MyTax Illinois.
Key Illinois Cannabis Trade Associations
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Illinois Cannabis Dispensary Association (ILDA) – Advocacy, policy updates, education.
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Cannabis Business Association of Illinois (CBAI) – Networking, compliance resources.
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Minority Cannabis Business Association (MCBA) – Equity & business support.
- National Cannabis Industry Association (NCIA) – Education, advocacy, networking.
Illinois Government Contacts
Illinois Department of Financial and Professional Regulation (IDFPR)
Division of Cannabis Regulation
555 W. Monroe St, Suite 500, Chicago, IL 60661
General: (872) 814‑1770 | fpr.medicalcannabis@illinois.gov
Illinois Department of Revenue
Administers: Retailers’ Occupation Tax, Cannabis Cultivation Privilege Tax, Cannabis Purchaser Excise Tax
Important Legal Notice
This guide is for informational purposes only and is accurate as of July 1, 2025. Tax laws and rates may change—always consult a licensed tax professional or the Illinois Department of Revenue for the latest information.
