Best State for Low Cannabis Tax: 5 States Ranked
Missouri's 6% cannabis excise tax makes it the best state for low cannabis tax. Compare Oregon, Michigan, Maine and New Jersey rates and rules.
Cannabis Tax Rates by State: The Short Answer
There is no national cannabis tax. Each legal state sets its own rate, and most stack two or three taxes on top of each other: an excise tax, the general sales tax, and a local add-on. At checkout, adult-use customers pay roughly 10% to 40% above the listed menu price depending on where they buy. Washington charges the highest single retail excise rate in the country at 37%. New Jersey and Maryland charge no state excise tax at all but still collect sales tax. Colorado splits the load between a 15% excise tax at the wholesale transfer point and a 15% retail marijuana sales tax.
cannabis tax rates by state 2025
How Cannabis Taxes Are Built
Excise tax
An excise tax applies only to cannabis. It is charged either as a percentage of the sale price, as a percentage of the wholesale price, or as a flat dollar amount per ounce of flower. Percentage-of-price excise taxes are the most common. Weight-based taxes are used in Alaska and in a few cultivation-focused programs.
best state for low cannabis tax
General sales tax
Most legal states also apply their standard sales tax to cannabis. That means the excise tax and the sales tax can both hit the same transaction. A few states, including New York, exempt cannabis from the general sales tax and fold everything into one excise rate instead.
Local and municipal taxes
Cities and counties can add their own cannabis tax on top of state rates. Local add-ons range from nothing to more than 10%. Denver, for example, layers a city tax over Colorado's state taxes, and California cities commonly add their own business and sales taxes.
Adult-Use Excise Tax Rates by State
The rates below are state-level adult-use taxes. Sales taxes and local additions are separate unless noted.
- Washington: 37% excise on retail sales
- Montana: 20% retail tax
- Oregon: 17% state retail tax
- Arizona: 16% excise tax
- California: 15% excise tax, plus state and local sales tax
- Colorado: 15% excise at wholesale, plus 15% retail marijuana sales tax
- Delaware: 15% retail marijuana sales tax
- Vermont: 14% excise, plus 6% sales tax
- New York: 13% total excise, split between state and local
- New Mexico: 12% retail excise, plus gross receipts tax
- Rhode Island: 10% excise, 7% sales tax, and up to 3% local
- Massachusetts: 10.75% excise, plus 6.25% sales tax and up to 3% local
- Illinois: 10% to 25% based on THC content, plus sales tax
- Michigan, Maine, Minnesota, Ohio, and Nevada: 10% state retail excise, plus sales tax
- Connecticut: THC-based excise, plus 6.35% sales tax
- Missouri: 6% excise, plus local sales tax
- New Jersey and Maryland: no state excise, sales tax applies, with local options in New Jersey
States With the Highest Total Tax Burden
Washington, Illinois, Rhode Island, Massachusetts, and Colorado tend to produce the highest final receipts for adult-use flower. Washington sits at the top because the 37% excise applies to the retail price and the state sales tax is charged on top.
States With the Lowest Total Tax Burden
Missouri, New Jersey, and Maryland land at the low end. Missouri applies a 6% excise rate. New Jersey and Maryland rely on standard sales tax with limited local additions, which keeps the total closer to 7% to 10% in most municipalities.
Medical Cannabis Usually Costs Less
Medical patients pay less in almost every state with a medical program. Arizona exempts medical cannabis from its 16% excise tax. Colorado applies a lower 4% medical sales tax instead of the 15% retail rate. California exempts medical patients from the 15% excise tax when they hold a valid physician's recommendation. Some states also waive the general sales tax for cardholders. The savings are often the difference between two prices for the same product.
How to Check the Rate Before You Order
- Go to your state's department of revenue or cannabis regulator website.
- Open the cannabis tax page and confirm the current excise percentage.
- Add your state sales tax rate.
- Check whether your city or county levies an additional cannabis tax.
- Confirm whether your medical card removes any of those layers.
- Apply the combined rate to the menu price to estimate your total.
Why the Rate Can Change Mid-Year
State legislatures adjust cannabis taxes often. Ohio, Maryland, and Illinois have all changed rates or rate structures since legalization. Some states also index weight-based taxes to inflation and adjust them each January. A rate you saw last year may not be the rate at checkout today, so check the tax authority directly before you build a budget around it.