The Illinois Department of Revenue (IDOR) released a bulletin Friday to 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 January 1, 2024, 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. This bulletin does not replace statutes, rules and regulations, or court decisions.

Municipal and County Cannabis Retailers’ Occupation Taxes are imposed on gross receipts from adult use cannabis sold at retail. 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%.

Adult use cannabis is taxed at the general merchandise sales tax rate applicable in the jurisdiction in which the dispensary is located, plus any additional municipal and county cannabis retailers’ occupation taxes. As with any local government tax administered by the Illinois Department of Revenue (IDOR), municipalities, and counties must submit their ordinances to IDOR by a statutory deadline in order to begin imposing the tax.

To verify 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 January 2024. For more Illinois cannabis industry news, visit here.

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