Recreational Marijuana Taxes Across US States, 2026

Recreational marijuana taxation is a hot policy issue in the US. Many states have elected to regulate and tax A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. legal marijuana sales and consumption, despite the ongoing federal prohibition. In December, President Trump signed an executive order directing the Attorney General to expedite the reclassification of marijuana from a Schedule I to a Schedule III drug under the Controlled Substances Act.

Today’s map shows states that have nullified the federal prohibition to establish a legal recreational cannabis market subject to an excise tax An excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections.. Legalization shifts consumers to safer legal markets while generating tax revenue for state programs. Harms associated with recreational marijuana are still somewhat understudied, but as more states allow legal markets and potential federal rescheduling enables medical study, more information will be available to optimize tax design.

Approaches to tax structure vary significantly across states. Some states tax by weight, some by price, and others by THC content. Ad valorem taxes are simpler but are associated with greater revenue volatility and do not target any specific harm-causing element. Ad quantum taxes on weight or quantity produce more stable revenues and better target the harm-causing element, but do not account for potency. Ad quantum taxes based on THC content most directly target the harm-causing element, but this adds complexity to the tax, and the technology to measure THC content can be so expensive that constant THC testing makes compliance costs unreasonable.

Disparate structures render state-by-state comparisons of rates or overall tax burden difficult. With federal prohibition still in effect, interstate commerce remains illegal, which creates a siloed market within each legalized state. Possible federal legalization may encourage harmony between state systems. When states legalize marijuana, taxes on legal product should be low enough to allow legal markets to compete with illicit markets, thereby reducing individual and societal harm while generating more revenues.

2026 Data 2025 2024 2023 2022 2021 2020 2019 2018 2017

Expand or Collapse Table

2026 Recreational Marijuana Taxes by State

State Excise Tax Rates on Recreational Marijuana, January 2026

State	Tax Rate
Alaska	$50/oz. mature flowers;

$25/oz. immature flowers;
$15/oz. trim; $1 per clone |
| Arizona | 16% on Retail Sales |
| California | 15% on Retail Gross Receipts |
| Colorado | 15% on Wholesale Average Market Rate ($658 per Pound of Bud); 15% on Retail Sales |
| Connecticut | 3% on Retail Sales;
$0.00625 per milligram of THC in plants;
$0.0275 per milligram of THC in edibles;
$0.009 per milligram of THC in other cannabis products; $1 per THC Infused Beverage |
| Delaware | 15% on Retail Sales |
| Illinois | 7% on Wholesale Gross Receipts;
10% on Retail Sales of cannabis products with ≤35% THC;
20% on Retail Sales of cannabis-infused products like edibles;
25% on Retail Sales of any product with a THC concentration >35% |
| Maine | 10% on Retail Sales; $335/lb. flower;
$94/lb. trim; $35 per mature plant;
$1.5 per immature plant or seedling;
$0.30 per seed |
| Maryland | 9% on Retail Sales |
| Massachusetts | 10.75% on Retail Sales |
| Michigan | 10% on Retail Sales |
| Minnesota (a) | 10% on Retail Gross Receipts |
| Missouri | 6% on Retail Sales |
| Montana | 20% on Retail Sales |
| Nevada | 15% on Wholesale Fair Market Value ($1,296 per Pound of Flower);
10% on Retail Sales |
| New Jersey | $2.50 per ounce |
| New Mexico (b) | 12% on Retail Sales |
| New York | 9% on Wholesale Sales; 13% on Retail Sales |
| Ohio | 10% on Retail Sales |
| Oregon | 17% on Retail Sales |
| Rhode Island | 13% on Retail Sales |
| Vermont | 14% on Retail Sales |
| Washington | 37% on Retail Sales |
Note: Many states and localities apply the general sales tax A sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. to marijuana sales or delivery taxes to marijuana deliveries, which are not included here. Many states allow local goverments to levy additional taxes, which are also not included here. Several states have legalized possession but not yet sale, and thus do not levy any taxes.
Source: State statutes. Data compiled by Jacob Macumber-Rosin, Adam Hoffer

Changes from 2025

• Maine rebalanced the taxes on recreational marijuana. The wholesale taxes per unit of product were reduced across product types, including from $335 per pound of flower to $223 per pound of flower, while the percentage tax on retail sales was raised from 10 to 14 percent.
• Maryland increased the tax on retail sales of recreational marijuana from 9 to 12 percent.
• Michigan established a new 24 percent wholesale tax on recreational marijuana in addition to the 10 percent retail tax that is still levied.
• Minnesota raised the tax on retail gross receipts of recreational marijuana from 10 to 15 percent.
• New Mexico raised the tax on retail sales of recreational marijuana from 12 to 13 percent, and has similar increases scheduled annually until 2030. Nearly half of US states regulate and tax recreational markets, and only 10 states still lack a comprehensive medical marijuana program. A few states have decriminalized possession but have not allowed for the cultivation or sale of marijuana, sometimes due to gubernatorial vetoes or court rulings blocking legalization.

Many states that have not yet legalized marijuana seem to be moving toward legalization, but challenges clearly remain. This year is set to be another eventful year for drug policy ballot initiatives, which may shift the marijuana tax landscape further. Legislative efforts are ongoing in many states, such as Virginia, New Hampshire, and Pennsylvania. Efforts seem to be underway for federal rescheduling of marijuana, which has some tax implications, but would not change the federal prohibition of recreational marijuana. More comprehensive federal reforms like the STATES 2.0 Act would be required to actually legalize marijuana.

Under the existing federal prohibition, businesses that operate in states that have nullified the federal policy to establish quasi-legal markets remain burdened by the inability to participate in interstate commerce. These businesses also have difficulty doing business with banking institutions and face struggles associated with the unique legal framework.

Many states have been facing budget shortfalls and/or a struggling legal marijuana industry, which has prompted several changes to marijuana tax policy. The tax in California increased briefly from 15 to 19 percent before that increase was reverted and delayed to give some relief to the industry. The new Michigan wholesale tax on adult-use marijuana was prompted by transportation revenue needs, with revenues from the new tax dedicated to the neighborhood road fund. Minnesota budget woes spurred the marijuana tax increase from 10 to 15 percent before legal sales even began.

Excise taxes on recreational marijuana are ill-suited for filling gaps in general revenue or shortfalls in unrelated spending programs. Squeezing the legal marijuana industry for revenue unnecessarily burdens a growing industry and encourages consumers to stick to established illicit markets. States should not go through all the trouble of nullifying federal marijuana prohibition, administering licensure and regulations, and fostering a legal market only to overburden that market with taxes that render it unable to compete with illicit purveyors.

A significant majority of marijuana consumption already occurs via illicit markets, even as more states legalize sales. States that impose excessive taxes, require expensive or limited licensure, or otherwise hinder their legal markets may not experience significant reductions in illicit consumption. If prices in legal markets are kept higher than illicit market prices, consumers will not be incentivized to switch to safer legal products. Properly designed taxes have the potential to generate billions of dollars in revenue for the states, though it may take some time for these revenues to be realized as legal markets develop.

With interstate commerce prohibited, the disparate tax designs across states do not yet create some of the problems that occur in other legal markets. There are no multistate businesses that must comply with varied regulations, and tax arbitrage or double taxation Double taxation is when taxes are paid twice on the same dollar of income, regardless of whether that’s corporate or individual income. cannot legally occur. However, if interstate commerce is eventually tolerated by the federal government, the significant differences in tax designs may create negative effects and opportunities for tax avoidance. States should prepare to harmonize their tax designs once interstate marijuana business is allowed—and would be better advised to coalesce around best practices now, before systems become more difficult to reform.

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About the Authors

Expert

Jacob Macumber-Rosin

Excise Tax Policy Analyst Jacob Macumber-Rosin is an Excise Tax Policy Analyst with the Tax Foundation. Jacob holds a BS in economics (politics and the economy) as well as a BS in civic and economic thought and leadership from Arizona State University.

• Expert ### Adam Hoffer

Director of Excise Tax Policy Adam Hoffer is the Director of Excise Tax Policy at the Tax Foundation. Dr. Hoffer earned his PhD in Economics from West Virginia University and his undergraduate degree from Washington & Jefferson College.

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