Washington, Illinois, and California are among the states with the highest cannabis tax rates in 2025. Washington charges a 37% excise tax at the register, Illinois uses potency-based excise tiers that reach 25%, and California adds a 15% excise tax on top of state and local sales taxes. In each case the tax is calculated on the retail price, so the total added cost at checkout often lands above 30%.
Does Cannabis Tax Rate Affect Price?
Why cannabis tax rates vary so much from state to state
Every legal state builds its cannabis tax differently, which is why two stores with similar shelf prices can have very different out-the-door totals. Three design choices matter most:
compare cannabis sales tax california vs oregon
- Excise tax vs. sales tax. A general sales tax applies to most goods. A cannabis excise tax applies only to cannabis and is usually far higher.
- Where the tax is collected. Some states tax cultivators by weight, some tax distributors, and some tax the retail sale. Taxes charged earlier in the chain still end up in the price you pay.
- Local add-ons. Cities and counties can stack their own cannabis taxes on top of the state rate, so the highest-tax jurisdiction in a state is often a specific city rather than the state as a whole.
States with the highest cannabis tax rates in 2025
The states below stand out either for a steep headline rate or for how many layers stack together. Rates change with each legislative session, so treat these as starting points and confirm current figures with the state revenue department.
cannabis excise tax rates by state map
- Washington. A 37% excise tax on retail cannabis sales, one of the steepest single rates in the country.
- Illinois. Potency-based excise tiers of roughly 10% for flower at or below 35% THC, 20% above that threshold, and 25% for concentrates and infused products, plus standard sales tax and local add-ons.
- California. A 15% excise tax on retail sales plus state and local sales taxes, which can exceed 10% in some cities. The state's separate cultivation tax was repealed in 2022.
- Colorado. A 15% retail marijuana sales tax layered on the state's special excise tax and general sales tax, with local rates that vary widely by municipality.
- Montana. A 20% retail tax on adult-use cannabis, with a reduced rate for registered medical patients.
- Vermont. A combined excise and sales tax structure that lands near 20% at retail.
- Alaska. A weight-based tax charged to cultivators per ounce of flower, which can amount to a large share of the final price on lower-priced products.
Headline rate vs. effective rate
The number a state advertises is rarely the number you pay. A 15% excise tax plus 8% sales tax plus a 3% city tax is a 26% effective rate, even though no single line looks dramatic. Weight-based cultivator taxes are the hardest to compare, because the same per-ounce charge is a small percentage on premium flower and a large percentage on budget flower.
This is why the ranking of states with the highest cannabis tax rates in 2025 shifts depending on whether you measure the statutory rate, the average effective rate, or the rate in the most expensive city in each state.
What high cannabis taxes mean for shoppers
Percentage-based excise taxes scale with price, so they hit premium products hardest in dollar terms. They also create real price gaps across borders. A shopper near a state line may find that the same category of product costs noticeably less a short drive away, even after accounting for travel.
High taxes also push some buyers toward the unregulated market, which is the main argument state legislatures use when they debate rate cuts or new tax tiers.
How to keep cannabis taxes from blowing up your budget
- Compare dispensaries across city and county lines, since local rates can differ within the same metro area.
- Look for stores that post tax-inclusive pricing so the menu price is the price you pay.
- Buy value tiers, since a percentage tax on a lower base costs less in absolute dollars.
- Check your state's medical program rules. Several states tax medical cannabis at a lower rate than adult-use products.
- Ask for a receipt breakdown. Seeing the excise and sales tax lines separately makes it easier to compare stores.
Confirming current rates before you buy
Cannabis tax rates are set by statute and revised often, sometimes mid-year. Before you plan a purchase around price, check the state revenue department's cannabis page and your city or county finance office for local rates. That combination, not a single statewide number, is what actually appears at checkout.