Marijuana Tax by State: Recreational, Cultivation, and Local

Marijuana tax by state runs from a low of 6% in Missouri to a high of 37% in Washington, and most legal states stack two or three separate cannabis taxes on top of the general sales tax. Twenty-four states have legalized recreational cannabis, and each has built its own framework using some combination of retail percentage taxes, wholesale or cultivation levies, and potency charges tied to THC content. The rate you see quoted is rarely the rate you pay at the register.

How States Build a Cannabis Tax

Before comparing numbers, it helps to know what the numbers represent. Every legal state uses at least one of three structures, and several combine them.

A percentage-of-price tax, sometimes called ad valorem, is the most common. It works like a sales tax: a flat percentage of the retail or wholesale price. When prices fall, revenue falls with them.

A weight-based tax charges a fixed dollar amount per ounce of flower, trim, or plant material, usually at the cultivation or wholesale stage. Revenue stays steady regardless of market swings, but cheaper products end up carrying a proportionally heavier tax load.

A potency-based tax ties the charge to milligrams of THC. Connecticut, for example, charges $0.00625 per milligram of THC for flower, $0.009 per milligram for concentrates, and $0.0275 per milligram for edibles.¹ Illinois uses a tiered version of the same idea: 10% on flower and products under 35% THC, 20% on cannabis-infused products like edibles, and 25% on anything above 35% THC.

These taxes can hit at multiple points in the supply chain. A cultivator may pay a weight-based tax at harvest, a wholesaler may pay an excise tax at transfer, and the consumer pays a percentage at checkout. That layering is why a state with a modest-looking headline rate can still produce a high final price.

Recreational Cannabis Tax Rates in the Major States

Washington

Washington charges a 37% excise tax on every retail cannabis sale, the highest cannabis-specific rate in the country.² The state does not authorize additional local cannabis taxes, but the regular state and local sales taxes still apply. Washington’s combined general sales tax averages roughly 10% depending on the jurisdiction, so consumers in high-sales-tax cities can face a total tax burden approaching or exceeding 47% on a single purchase.

Colorado

Colorado runs two state-level cannabis taxes. Retailers collect a 15% special sales tax at the register, and a separate 15% excise tax applies at the wholesale level when cannabis first moves from a cultivator to a retailer or processor.³ Recreational cannabis is exempt from Colorado’s standard 2.9% state sales tax, so those two 15% levies are the main state charges.⁴ Local jurisdictions can add their own excise taxes on top.

California

California charges a 15% cannabis excise tax on the retail selling price under Revenue and Taxation Code Section 34011.2.⁵ That rate was reduced from 19% by Assembly Bill 564 in 2025, and another adjustment is scheduled for the 2028–2029 fiscal year. On top of the excise tax, consumers pay the statewide 7.25% sales tax plus any local sales tax, and some cities impose their own cannabis-specific taxes. California eliminated its separate cultivation tax in 2022, shifting the full revenue burden to the retail level.

Oregon

Oregon charges a 17% state tax on all recreational cannabis sales, collected by the retailer and remitted to the Department of Revenue.⁶ Cities and counties can add up to 3% on top of that, bringing the maximum rate to 20% where local governments have opted in.⁷ Oregon has no general sales tax, so that 17% to 20% is the entire tax bill.

Illinois

Illinois taxes cannabis by potency and product type. Flower and products under 35% THC are taxed at 10% of the purchase price, cannabis-infused products like edibles at 20%, and anything above 35% THC at 25%. The state’s 6.25% sales tax applies on top, along with any local sales taxes. Counties and municipalities can add their own cannabis taxes of up to 3.75%, which pushes the total load in Chicago above 40%.

Arizona

Arizona charges a 16% excise tax on all adult-use cannabis sales, reported alongside the state’s transaction privilege tax.⁸ The excise tax is layered on top of the state and local transaction privilege taxes that apply to general retail sales, pushing the total rate above 25% in most parts of the state.

Michigan

Michigan overhauled its cannabis tax structure in 2026, replacing its former excise tax with a 24% wholesale tax on the wholesale price of adult-use cannabis.⁹ The collection point shifted from the retail register to the transfer between wholesaler and retailer, but the cost ultimately gets built into the shelf price.

Missouri

Missouri sits at the low end of the range, with a 6% state tax on recreational cannabis. Local jurisdictions can add their own charges on top.

Cultivation and Wholesale Taxes

A lot of cannabis tax happens before the product ever reaches a dispensary shelf. Those costs get baked into the base price, so consumers pay them even though the check is written earlier in the supply chain.

Alaska uses a straight weight-based system: $50 per ounce of mature flower, $25 per ounce of immature flower, and $15 per ounce of trim. Revenue stays predictable regardless of retail price swings, but small-batch growers feel the weight tax more per dollar of sales than large operations that spread cost across high volume.

Colorado’s 15% wholesale excise tax runs alongside its 15% retail special sales tax, producing 30% in combined state-level cannabis taxes before any local add-on.⁴ Michigan’s new 24% wholesale tax works similarly, hitting the transfer between wholesaler and retailer.⁹ Both are reminders that the headline retail rate can undersell the full picture.

Local Cannabis Taxes

Most legal states let cities and counties impose their own cannabis taxes on top of state-level charges. The caps vary, but even a few percentage points move the final number noticeably.

Colorado allows local sales or excise taxes on recreational cannabis, administered and collected by the local jurisdiction rather than the state.¹⁰
Oregon caps local cannabis taxes at 3% of retail sales.⁷
Connecticut lets municipalities charge up to 3% on retail gross receipts.
Illinois lets counties and municipalities layer on up to 3.75%.

The practical result is that a buyer in a major city usually pays noticeably more than someone in a rural area of the same state. If total tax gets too high in one jurisdiction, some demand shifts to lower-tax neighbors or back to unlicensed sellers, which is what legislators watch when setting rates.

Medical Cannabis Pays Less

Nearly every state with both programs taxes medical cannabis at a significantly lower rate than recreational. The rationale is that medical cannabis is treated as a health necessity, and heavy taxation would undermine patient access.

Arizona exempts medical patients with a valid registry card from the 16% excise tax that recreational buyers pay, leaving only the standard state transaction privilege tax on their purchases.⁸ Colorado applies its 15% special sales tax only to recreational sales; medical cannabis is subject to the regular 2.9% state sales tax.⁴

For frequent users, the savings can amount to hundreds of dollars a year. Qualifying for the lower rate requires a valid state-issued medical card, which involves a physician certification and a registration fee. Fees vary by state but typically fall between $25 and a few hundred dollars a year, including the doctor visit.

Where the Money Goes

Most states with legal cannabis direct the tax revenue to specific programs rather than dropping it into the general fund. The allocations reflect each state’s priorities and, over time, build political constituencies that depend on the money continuing to flow.

Colorado sends wholesale excise tax revenue to school construction through the Building Excellent Schools Today fund, with portions of the retail tax flowing to the general fund and the state public school fund. Oregon splits its cannabis revenue across education (40% to the state school fund), mental health and drug treatment services (25%), law enforcement (15%), and local governments (20%). Michigan directs 35% to the statewide school aid fund, 35% to transportation, and splits the remaining 30% between municipalities and counties that host cannabis businesses.

Illinois puts 25% of cannabis tax revenue into the Recover, Reinvest, and Renew program that targets communities disproportionately affected by past drug enforcement. New York sends 40% to a community reinvestment fund and another 40% to education through the state lottery fund. California directs 60% of its excise tax revenue to youth anti-drug programs, 20% to environmental programs, and 20% to public safety.

1
Connecticut State Department of Revenue Services. Cannabis Tax Information
2
Washington State Legislature. RCW 69.50.535 – Cannabis Excise Tax
3
Colorado General Assembly. Marijuana Taxes
4
Colorado Department of Revenue – Taxation. Marijuana Sales Tax
5
California Department of Tax and Fee Administration. Tax Rates – Special Taxes and Fees
6
Oregon Department of Revenue. Marijuana
7
Oregon Department of Revenue. Marijuana Tax Distributions
8
Arizona Department of Revenue. Filing Requirements
9
Michigan Department of Treasury. Wholesale Marijuana Tax
10
Colorado Department of Revenue – Taxation. Marijuana Tax Information for Local Governments