Cannabis excise tax by state in 2024 is not a uniform national rate. Each state with legal cannabis sets its own excise tax, and a few states impose no excise tax at all. The tax can be a percentage of price, a flat fee per weight, or a tiered structure, and it often applies on top of standard sales tax.
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How Cannabis Excise Taxes Work
An excise tax is a tax on a specific product, like alcohol, tobacco, or fuel. For cannabis, states may collect the excise tax at the cultivation, wholesale, or retail level. A retail excise tax is added to the final sale price. A wholesale excise tax is charged to the business that buys from a cultivator or processor, and that cost is usually passed to the consumer. A weight-based tax is a fixed dollar amount per ounce or gram, often charged at the cultivation stage.
Why Rates Vary by State
State lawmakers set cannabis excise tax rates based on revenue goals, public health objectives, and the existing tax code. Some states aim to keep legal cannabis competitive with the illicit market, so they set lower rates. Others use higher rates to fund social programs or regulation. Because each state passes its own cannabis law, the rate and method can differ from one border to the next.
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Common Excise Tax Structures
- Percentage of retail price: The tax is a set percentage of the final retail sale price, similar to a sales tax but applied only to cannabis.
- Percentage of wholesale price: The tax is a percentage of the price before retail markup, often paid by the retailer to the supplier.
- Weight-based tax: A flat dollar amount per ounce or gram, usually charged when cannabis is harvested or sold to a processor.
- Tiered tax: The rate increases based on THC potency, product type, or total sales volume.
Medical vs. Recreational Cannabis Taxes
Many states treat medical and recreational cannabis differently for tax purposes. Medical cannabis may be exempt from excise tax or face a reduced rate. Recreational cannabis usually carries the full excise tax plus regular sales tax. Some states also allow local governments to add their own cannabis taxes, which can raise the total rate further.
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How to Find Your State's 2024 Cannabis Excise Tax Rate
The most reliable source is your state's department of revenue or tax agency. These agencies publish current rates and update them when laws change. The Tax Foundation maintains a tracker of cannabis taxes by state, and the National Conference of State Legislatures offers overviews of state cannabis tax laws. You can also check your state's cannabis regulatory board for the latest rules on excise tax and sales tax.
Local Cannabis Taxes to Watch
Cities and counties may add their own cannabis taxes on top of state taxes. Local taxes can apply to retail sales, cultivation, or both. If you run a cannabis business or plan a large purchase, check local ordinances as well as state law. Local rates can change through ballot measures or city council decisions, so verify the current rate before you buy or sell.
Because cannabis excise tax by state changes with new legislation, always confirm the rate for 2024 with the official state agency before you rely on it for budgeting or compliance.