Regulatory report: US state-by-state taxation of medical cannabis

Tax policies for medical cannabis vary widely across the states of the US, as the public policy debate continues. Whereas some states seek to derive revenue from it – either to fund tight regulation over the programme or other endeavours – others subject medical cannabis to lower tax rates than other goods to reduce patients’ medical costs.

By comparison, CBD products are generally taxed in the same way as any other sale of goods: they are subjected to the general state sales tax. Recreational cannabis, on the other hand, is often subject to excise taxes – sometimes at very high rates.

This report focuses only on state taxation of medical cannabis. On the federal level, there is no excise tax on cannabis, as it is a controlled substance. Cannabis businesses must still pay income taxes, though, and cannot claim deductions that other business routinely use for federal tax purposes.