Should Illinois's cannabis purchaser excise tax and local cannabis taxes be added on top of the retail price, and do they get taxed again themselves?

Plain-English summary

A cannabis retailer asked a basic point-of-sale question: when a customer buys recreational cannabis, does the local cannabis tax get added on top of the retail price, and how should the final receipt total be calculated? The Department's answer walks through several DIFFERENT, STACKED taxes that can apply to a single cannabis sale -- and confirms that none of these add-on taxes become part of the seller's own taxable receipts (no "tax on tax").

Recreational (non-medical) cannabis sales can carry several layers: (1) the regular state Retailers' Occupation Tax/Use Tax framework (though cannabis is taxed under its own specific tax laws, not the general 6.25% rate); (2) the state Cannabis Purchaser Excise Tax, which varies by potency -- 10% of the purchase price for cannabis at or below 35% THC, 25% for cannabis above 35% THC, and 20% for cannabis-infused products; and (3) optional local add-ons -- a Municipal or County Cannabis Retailers' Occupation Tax, layered on top if the local government has adopted one, plus a home-rule municipality's general Home Rule Municipal Retailers' Occupation Tax on other (non-cannabis-specific) items sold in the store.

The key mechanical point: the excise tax and any local cannabis or home-rule tax must be stated on the invoice as a SEPARATE, additional charge, not folded into the base "purchase price"/"selling price" used to calculate any of the OTHER taxes. Illinois's regulations explicitly exclude amounts collected under the cannabis excise tax, the municipal/county cannabis taxes, and other locally imposed taxes from the "purchase price"/"gross receipts" base of each other -- so a retailer doesn't end up paying tax on the tax it already collected.

What this means for you

Cannabis retailers and dispensaries

Build your point-of-sale system to calculate each layer independently, off the BASE product price, and then add each tax as its own separately-stated line item -- don't compound the taxes on top of each other. The potency-tiered excise rate (10%/25%/20%) depends on the specific product's THC level or whether it's infused, so your system needs accurate product-level potency data, not just a flat storewide rate.

Business owners in home-rule municipalities

If your municipality has adopted BOTH a Municipal Cannabis Retailers' Occupation Tax and a general Home Rule Municipal Retailers' Occupation Tax, understand which applies to which line item -- the general home-rule tax reaches ordinary retail goods, while the cannabis-specific municipal/county taxes apply specifically to cannabis sales, and the two aren't meant to double-stack on the same receipts.

Accountants and tax professionals

When computing a client's taxable gross receipts/selling price under any of these cannabis-related tax laws, remember to EXCLUDE amounts the client separately collected under the OTHER cannabis taxes (excise, municipal, county) and other locally imposed occupation/use taxes -- each tax's own "selling price" definition carves the others out, so double-counting is a common and avoidable error.

Common questions

Q: Is the cannabis purchaser excise tax added on top of the sale price, or built into it?
A: It must be stated on the invoice as a distinct, separate charge from the purchase price of the cannabis -- not built into an all-in price.

Q: What are the excise tax rates?
A: 10% of the purchase price for cannabis with THC at or below 35%, 25% for cannabis above 35% THC, and 20% for cannabis-infused products.

Q: Does the cannabis excise tax apply to medical cannabis?
A: No. The Cannabis Purchaser Excise Tax Law specifically excludes cannabis taxed under the Compassionate Use of Medical Cannabis Program.

Q: Do local cannabis taxes get included when calculating the state excise tax (or vice versa)?
A: No. Each cannabis tax law's definition of "purchase price"/"selling price"/"gross receipts" specifically excludes amounts added to the bill because of the OTHER cannabis taxes and other locally imposed occupation or use taxes -- they aren't taxed on top of each other.

Q: Can I rely on this letter for my own dispensary's tax setup?
A: No. This is a General Information Letter -- it's not binding on the Department and doesn't reflect your specific municipality's local tax adoptions. Confirm your locality's actual cannabis tax ordinances with a tax professional.

Citations and references

Statutes:

• 410 ILCS 705/65-10 (Cannabis Purchaser Excise Tax Law)
• 65 ILCS 5/8-11-23 (Municipal Cannabis Retailers' Occupation Tax Law)
• 55 ILCS 5/5-1006.8 (County Cannabis Retailers' Occupation Tax Law)
• 65 ILCS 5/8-11-1 (Home Rule Municipal Retailers' Occupation Tax reimbursement authority)

Regulations:

• 86 Ill. Adm. Code 423.100, 423.105 (excise tax invoicing; rate tiers; exclusions from purchase price)
• 86 Ill. Adm. Code 424.105, 425.105, 425.106 (municipal/county cannabis tax "gross receipts"/"selling price")
• 86 Ill. Adm. Code 270.101 (Home Rule Municipal Retailers' Occupation Tax)

Source

• Landing page: Illinois 2026 Sales Tax Letter Rulings
• Original PDF: ST26-0013-GIL.pdf

Original ruling text

ST 26-0013-GIL 04/28/2026 CANNABIS PURCHASER EXCISE TAX
Cannabis purchaser excise tax is not part of the seller’s gross receipts subject to
tax. (This is a GIL).
April 28, 2026
NAME
COMPANY
COMPANY1
ADDRESS
EMAIL
Dear NAME:
This letter is in response to your letter dated March 11, 2026, in which you requested
information. The Department issues two types of letter rulings. Private Letter Rulings
(“PLRs”) are issued by the Department in response to specific taxpayer inquiries concerning
the application of a tax statute or rule to a particular fact situation. A PLR is binding on the
Department, but only as to the taxpayer who is the subject of the request for ruling and only
to the extent the facts recited in the PLR are correct and complete. Persons seeking PLRs
must comply with the procedures for PLRs found in the Department’s regulations at 2 Ill.
Adm. Code 1200.110. The purpose of a General Information Letter (“GIL”) is to direct
taxpayers to Department regulations or other sources of information regarding the topic
about which they have inquired. A GIL is not a statement of Department policy and is not
binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
https://tax.illinois.gov/ to review regulations, letter rulings and other types of information
relevant to your inquiry.
The nature of your inquiry and the information you have provided require that we
respond with a GIL.
INQUIRY:
I just received the updated certificate and tax information for COMPANY
from NAME1. Both are attached.
I wanted to get clarification on how these taxes should be applied at the
point of sale. Specifically, for cannabis sales in CITY, should the local
XX.XX% recreational cannabis tax be added on top of the retail sale amount
to arrive at the customer’s total, or is that tax treated differently?

NAME/COMPANY1
Page 2
April 28, 2026
For example, if a customer purchases only cannabis products totaling
$10.00, what would the total tax amount be in CITY, and what would the
customer’s final out-the-door total be?
start.

I just want to make sure we are pricing and collecting correctly from the
Thank you for your help.

DEPARTMENT’S RESPONSE:
The Retailers’ Occupation Tax Act imposes a tax upon persons engaged in this State
in the business of selling tangible personal property to purchasers for use or consumption.
See 35 ILCS 120/2; 86 Ill. Adm. Code 130.101. In Illinois, Use Tax is imposed on the privilege
of using, in this State, any kind of tangible personal property that is purchased anywhere at
retail from a retailer. See 35 ILCS 105/3; 86 Ill. Adm. Code 150.101. These taxes comprise
what is commonly known as “sales” tax in Illinois.
Local Tax
The corporate authorities of a home rule municipality may impose a tax upon all
persons engaged in the business of selling tangible personal property, other than items of
tangible personal property titled or registered with an agency of this State’s government, at
retail in the municipality on the gross receipts from these sales made in the course of such
business. 86 Ill. Adm Code 270.101(a). This additional tax may not be imposed on tangible
personal property taxed at the 1% rate under the Retailers’ Occupation Tax Act, i.e. medical
cannabis. 86 Ill. Adm. Code 270.101(b).
The various locally imposed retailers’ occupation tax acts (e.g. the Home Rule
Municipal Retailers’ Occupation Tax (HRMROT)) authorize retailers subject to these taxes to
reimburse themselves for their liability by separately stating these taxes to their customers.
See, for example, 86 Ill. Adm. Code 270.101. The statutory language authorizing the
HRMROT states, in part, as follows:
Persons subject to any tax imposed under the authority granted in this Section
may reimburse themselves for their seller’s tax liability hereunder by
separately stating such tax as an additional charge, which charge may be
stated in combination, in a single amount, with State tax which sellers are
required to collect under the Use Tax Act...

NAME/COMPANY1
Page 3
April 28, 2026
65 ILCS 5/8-11-1. Sellers responsible for State and local retailers’ occupation taxes must
collect from purchasers the 6.25% Use Tax liability and may collect reimbursement for all
local tax liabilities.
Any amount added to the selling price of tangible personal property by the seller
because of a Home Rule Municipal Retailers’ Occupation Tax, the Retailers’ Occupation
Tax, the Use Tax, or any other local occupation tax administered by the Department, and
collected from the purchaser, are excluded as part of the seller’s gross receipts that are
subject to such Home Rule Municipal Retailers’ Occupation Tax. 86 Ill. Adm. Code
270.101(c).
If tax is not collected by the retailer, purchasers should self-assess and remit Use Tax
to the Department at the rate of 6.25%. In this situation, the purchaser would not be
obligated to pay State and local retailers’ occupation taxes as the incidence of those taxes
is on the retailer, not the user. 65 ILCS 5/8-11-1.
Cannabis Purchaser Excise Tax
The Cannabis Purchaser Excise Tax Law (Law) imposes a tax on the privilege of using
cannabis, excluding cannabis subject to tax under the Compassionate Use of Medical
Cannabis Program. 410 ILCS 705/65-10. The tax imposed by the Law is collected from the
purchaser by the cannabis retailer. The tax imposed by the Law shall be stated on the
invoice as a distinct item separate and apart from the purchase price of the cannabis. 86 Ill.
Adm. Code 423.100. The cannabis purchaser excise tax varies based on the type and
potency of the cannabis. Cannabis with an adjusted delta-9-tetrahydrocannabinol (THC)
level at or below 35% is taxed at 10% of the purchase price, and cannabis with an adjusted
THC above 35% is taxed at 25% of the purchase price. Tax on all cannabis infused products
is imposed at 20% of the purchase price.
“Purchase price” means the consideration paid for a purchase of cannabis,
valued in money, whether received in money or otherwise, including cash, gift
cards, credits, and property and shall be determined without any deduction on
account of the cost of materials used, labor or service costs, or any other
expense whatsoever.
However, “purchase price” does not include
consideration paid for: . . . any amounts added to a purchaser’s bill because of
charges made under the tax imposed by the Cannabis Purchase Excise Tax
Law, the Municipal Cannabis Retailers’ Occupation Tax Law, the County
Cannabis Retailers’ Occupation Tax Law, the Retailers’ Occupation Tax Act . .
. or any locally imposed occupation or use tax.
86 Ill. Adm. Code 423.105 (internal citations omitted).

NAME/COMPANY1
Page 4
April 28, 2026

Local Cannabis Tax
The Municipal Cannabis Retailers’ Occupation Tax Law permits a municipality to
impose a tax upon all persons engaged in the business of selling cannabis, other than
cannabis purchased under the Compassionate Use of Medical Cannabis Program Act, at
retail in the municipality on the gross receipts from these sales made in the course of that
business. 65 ILS 5/8-11-23. Similarly, the County Cannabis Retailers’ Occupation Tax Law
authorizes a county to impose an additional tax on persons engaged in the business of
selling cannabis other than medical cannabis on the gross receipts. 55 ILCS 5/5-1006.8.
For the purpose of the Municipal and County Cannabis Retailers’ Occupation Tax
Laws, “gross receipts” from the sales of cannabis by a cannabis retailer means the total
selling price or the amount of such sales. 86 Ill. Adm. Code 424.105 and 425.105. For
purposes of these Laws, “selling price” means:
the consideration for a sale valued in money, whether received in money or
otherwise, including cash, credits, property, and services, and shall be
determined without any deduction on account of the cost of the property sold,
the cost of materials used, labor or service cost, or any other expense
whatsoever, but does not include separately stated charges identified on the
invoice by cannabis retailers to reimburse themselves for their Tax liability
under the Law. However, “selling price” does not include consideration paid
for: . . .
any amounts added to a purchaser’s bill because of charges made under the
County Cannabis Retailers’ Occupation Tax Law, the Cannabis Purchaser
Excise Tax Law [410 ILCS 705/Art. 65], the Municipal Cannabis Retailers’
Occupation Tax Law [65 ILCS 5/8-11-23], the Use Tax Act [35 ILCS 105], the
Service Use Tax Act [35 ILCS 110], or any locally imposed occupation tax.
86 Ill. Adm. Code 424.105 and 425.106
As with the HRMROT, any amount added to the selling price of tangible personal
property by the seller because of the Retailers’ Occupation Tax or any other local occupation
tax administered by the Department, and collected from the purchaser, are excluded as part
of the seller’s gross receipts for purposes of the Municipal and County Cannabis Retailers’
Occupation Taxes.

NAME/COMPANY1
Page 5
April 28, 2026
I hope this information is helpful. If you require additional information, please visit
our website at https://tax.illinois.gov/ or contact the Department’s Taxpayer Information
Division at 800-732-8866.
Very truly yours,
Kimberly Rossini
Associate Counsel
KAR:slc

Printed by the authority of the State of Illinois
Electronic Only - One Copy
Issued 04/28/2026, Redacted 5/14/2026