Which is taxed higher, cannabis or alcohol?
Cannabis is taxed far higher than alcohol in almost every legal state. Legal weed carries a state excise tax of 6% to 37% plus standard sales tax on top, while beer, wine, and spirits pay a federal excise of a few cents per serving and a state excise that usually stays under 10% of retail.
how are cannabis taxes calculated
Our pick for the lowest total cannabis tax: Missouri, at 6% excise with no local cannabis tax in most counties. Runner-up is New Jersey, which charges only its 6.625% sales tax on cannabis.
How much tax do you pay on cannabis?
Most legal states stack an excise tax on top of the normal sales tax. A $40 eighth in Washington, with the nation's highest 37% excise, jumps to roughly $58 after excise and sales tax. Section 280E also blocks cannabis businesses from deducting ordinary expenses, and those costs get baked into shelf prices.
how are cannabis taxes calculated
How much tax do you pay on alcohol?
The federal excise on beer is $13.50 per barrel, about 4 cents per 12-ounce can. Wine runs $1.07 to $3.40 per gallon, roughly 20 to 65 cents per bottle. Spirits pay $13.50 per proof gallon, about 8 cents per 1.5-ounce shot.
Cannabis Excise Tax by State 2024: A Guide to Rates and Structures
State alcohol excise adds a few cents to roughly 20 cents per standard drink. Sales tax then applies at the register, just as it does for cannabis.
Why is cannabis taxed more than alcohol?
Cannabis is a young legal market, so states use excise taxes to fund regulation, enforcement, and social equity programs. Alcohol taxes date back decades and are rarely indexed to inflation, so their real value erodes every year. Federal prohibition adds the 280E deduction ban on top, which makes cannabis the most heavily taxed consumer product sold legally in the United States.
Which states have the lowest cannabis taxes?
Compare the total out-the-door rate, not just the excise line. These states give recreational shoppers the best value:
- Missouri: 6% excise, no local cannabis tax in most counties. Best overall.
- New Jersey: no cannabis excise, only 6.625% sales tax. Best in the Northeast.
- Oregon: 17% state cannabis tax, zero sales tax. Best on the West Coast.
- Maine: 10% sales tax, no excise. Strong for New England.
- Colorado: 15% excise plus 2.9% state sales tax plus local add-ons. Mid-tier.
- Washington: 37% excise plus sales tax. Highest total in the country.
Is cannabis taxed more than alcohol in every state?
Nearly every state taxes cannabis heavier than beer or wine. High-proof spirits in control states can approach cannabis rates, and New Jersey's sales-tax-only structure sits close to spirits, but cannabis still loses on total tax per dollar almost everywhere.
Bottom line for shoppers: alcohol will almost always be the cheaper taxed product per serving. If you want to cut your cannabis tax bill, buy in Missouri, New Jersey, or Oregon, and check whether your local county adds its own cannabis tax before you check out.