Cannabis tax rates by state range from about 6% to 37% at the state level, and most legal states stack a cannabis excise tax on top of the standard sales tax. Washington charges the highest statewide rate at 37% on retail sales, while Missouri's 6% excise tax is the lowest cannabis-specific rate in the country. What you pay at the register is almost always higher than the headline rate, because cities and counties add their own taxes in most legal markets.
tax revenue from cannabis legal states
How Do States Tax Cannabis?
States use three main levers: a percentage excise tax on retail sales, a weight or potency based tax on growers and processors, and the ordinary sales tax that applies to most goods. Colorado and Nevada tax wholesale transactions, while Illinois and Connecticut set rates according to THC content. A few states, including Maryland, apply only their standard sales tax with no separate cannabis excise at all.
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Cannabis Tax Rates by State at a Glance
These are state-level rates as of 2025, before local and municipal add-ons. Rates change often, so treat this as a starting point rather than a receipt.
state with lowest cannabis tax rate
- Alaska: 7% state retail tax, plus local taxes up to 10%
- Arizona: 16% excise tax, medical exempt
- California: 15% excise tax, plus state and local sales tax
- Colorado: 15% excise on wholesale plus a 15% state retail sales tax
- Illinois: 10% to 25% excise based on THC content, plus standard sales tax
- Maine: 10% excise plus 5.5% sales tax
- Massachusetts: 10.75% excise plus 6.25% sales tax, roughly 20% combined
- Michigan: 10% excise plus 6% sales tax
- Missouri: 6% excise plus 4.225% state sales tax
- Montana: 20% adult-use excise, 4% for medical
- Nevada: 10% excise plus state and local sales tax
- New Jersey: 6.625% sales tax plus a 2% municipal tax and a ramping excise
- New York: 13% excise split between state and local, plus sales tax
- Ohio: 10% excise plus sales tax
- Oregon: 17% state retail tax, up to 20% with local add-ons
- Rhode Island: 10% excise plus 7% sales tax plus 3% local
- Vermont: 14% excise plus 6% sales tax
- Washington: 37% excise plus sales tax
Which State Has the Highest Cannabis Tax?
Washington holds the top spot with a 37% excise tax on retail cannabis sales, applied before sales tax is added. In a city with a 9% combined sales tax, the effective total can approach 45% of the sticker price. Massachusetts, Vermont, and Montana round out the higher end of the range.
Which States Have the Lowest Cannabis Tax?
Missouri's 6% excise tax is the lowest statewide cannabis rate, followed by Alaska at 7% and Maryland at 9% with no separate excise. Maine and Michigan sit at 10% excise, which is still low by national standards. Medical cannabis programs in these states are frequently taxed at a lower rate or exempt entirely.
Do Local Cannabis Taxes Apply on Top of State Rates?
Yes, and they are the reason two shops in the same state can charge different totals. Local add-ons typically run 1% to 3%, but Alaska allows municipalities up to 10% and some California cities levy double-digit local rates. Always check the local rate for the specific city where you buy.
Is Medical Cannabis Taxed Differently?
Usually yes. Arizona, Ohio, and several other states exempt medical cannabis from the excise tax, and a number of states skip sales tax on medical purchases with a valid patient card. Adult-use customers pay the full stacked rate in nearly every case.
How Do I Estimate the Total Tax on a Purchase?
Add the state excise, the state sales tax, and any local taxes, then apply them in order, since excise is usually calculated first. A $50 product in Washington with a 37% excise and 9% sales tax lands near $75. Wholesale and cultivation taxes are already baked into the shelf price, so shoppers never see them separately.