The Illinois Department of Revenue (IDOR) released an informational bulletin for all dispensaries engaged in the business of selling adult use cannabis at retail in taxing jurisdictions that have enacted municipal or county cannabis retailers’ occupation taxes.

Effective Jan. 1, 2025, certain taxing jurisdictions have, by ordinance, imposed or changed their Municipal or County Cannabis Retailers’ Occupation Tax on the gross receipts from sales of adult use cannabis. These taxes are in addition to Illinois Retailers’ Occupation Tax on general merchandise (6.25%) and any locally imposed retailers’ occupation tax on general merchandise, which also apply to sales of adult use cannabis.

Cash registers and computer programs must be adjusted so that beginning on Jan. 1, 2025, the corrected tax rate is collect and paid. To verify your new combined state and local retailers’ occupation tax rates (i.e., state and local taxes) on adult use cannabis, go to the MyTax Illinois Tax Rate Finder at mytax.illinois.gov and select rates for Jan. 2025.

What is taxed?

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

Municipalities may impose a tax on retail sales of cannabis, other than medical cannabis, at a rate that may not exceed 3%, imposed in one-quarter percent (0.25%) increments. Counties may impose a tax (also in one-quarter percent increments) on retail sales of cannabis, other than medical cannabis, at the following rates:

• In unincorporated areas of the county, the rate may not exceed 3.75%
• In a municipality located in the county, the rate may not exceed 3%.

For implementation of the tax by the Illinois Department of Revenue (IDOR), municipalities and counties must submit their ordinances to IDOR by April 1 for July 1 implementation and by October 1 for implementation on the following January 1.

For more information about Municipal and County Cannabis Retailers’ Occupation Taxes, visit the Cannabis Taxes Information Page on our website. You may also contact the Local Tax Allocation Division at Rev.Localtax@illinois.gov.

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