Pot Brownies Don’t Get Illinois’ Grocery Sales Tax Break

June 29, 2020, 4:52 PM

Pot brownies and cannabis-infused gummy bears can’t be considered food under Illinois’ sales and use tax code and don’t qualify for the 1% preferential rate on groceries.

The state Department of Revenue finalized a regulation June 26 clarifying that food items containing cannabis must be taxed at the 6.25% general merchandise rate, not the 1% rate that applies to most grocery items. Food items containing cannabis are also subject to Illinois’ Cannabis Cultivation Privilege Tax Law and the Cannabis Purchaser Excise Tax Law, the department said.

  • In June 2019 Gov. J.B. Pritzker (D) signed legislation making Illinois the 11th state to legalize recreational marijuana. Sales went live on Jan. 1.
  • Consumers of non-medical marijuana generally also pay a 20% excise tax on cannabis-infused products.
  • Illinois hopes to collect $1 billion in cannabis excise taxes, sales taxes, and licensing fees over the next five years.

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Kathy Larsen at klarsen@bloombergtax.com

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