New Adult-Use Cannabis Taxes Coming In Illinois

Certain adult-use cannabis retailers in Illinois will soon have a new tax imposed on sales.

The Illinois Department of Revenue (IDR) on Tuesday released a bulletin stating that certain taxing jurisdictions have imposed by ordinance a municipal or county retailers’ occupation tax on the gross receipts from adult-use cannabis sales.

The new taxes, which become effective on January 1, 2021, are in addition to the 6.25 percent Illinois Retailers’ Occupation Tax and any other local retailers’ occupation taxes imposed on sales of general merchandise and adult-use cannabis products.

The bulletin goes on to clarify that the new taxes are for sales of adult-use cannabis and not purchases made by patients in the state’s medical cannabis program.

“Municipal and County Cannabis Retailers’ Occupation Taxes are imposed on gross receipts from adult use cannabis sold at retail,” states the bulletin. “These taxes, however, are not imposed on cannabis purchased under the Compassionate Use of Medical Cannabis Program Act.”

The bulletin directs retailers to make adjustments to point-of-sale devices and other computer systems so that they can collect and pay the correct tax amounts.

According to the IDR bulletin, tax rates may not exceed 3.75 percent in unincorporated areas of a county or 3 percent in a municipality located in a county.

The bulletin states that municipalities may impose the tax rates in one-quarter increments.

Before counties and municipalities can begin imposing the taxes, they must submit their ordinances to the IDR by a statutory deadline.

Retailers who would like to verify their new combined state and local retailers’ occupation tax rate on adult-use cannabis can consult the tax rate database on the IDR website.

By entering the effective date and municipality or county name, retailers may view a complete list of all sales tax rates.