Current through Register Vol. 48, No. 38, September 20, 2024
a)
Beginning January 1, 2014, a tax is imposed upon the privilege of
cultivating medical cannabis at a rate of 7% of the sales price per ounce. The
tax is paid by a cultivation center and is not the responsibility of a
dispensing organization, qualifying patient or designated caregiver
[410
ILCS 130/200(a)] .
b)
The tax imposed under the
Law shall be in addition to all other occupation or privilege taxes
imposed by the State of Illinois or by any municipal corporation or political
subdivision thereof [410
ILCS 130/200(b)] .
c) The cultivation center may seek
reimbursement of the tax. The charge for reimbursement may not be identified on
the invoice as a tax.
d) Tax Base
1) The tax is calculated based on the sales
price of the number of ounces or partial ounces of usable medical cannabis sold
by a cultivation center. For example, a cultivation center sells 500 ounces of
medical cannabis to a dispensing organization for $100,000. The tax is 7% of
$100,000, or $7,000.
2) The sales
price is 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. See 86 Ill. Adm. Code
130.415
for rules regarding the treatment of transportation and delivery charges. For
example, a cultivation center sells 500 ounces of medical cannabis to a
dispensing organization for $100,000 plus a delivery charge of $250 and a fuel
surcharge of $50. The cultivation center delivers the medical cannabis to the
dispensing organization. The cultivation center and the dispensing organization
do not agree upon the delivery charges separately from the sales price of the
medical cannabis that is sold. As a result, the cost of the delivery service is
part of the "sales price" of the medical cannabis. The sales price for purposes
of determining the tax is $100,300.
3) The tax is computed on the sales price of
the medical cannabis sold after the application of any applicable discounts.
For example, a cultivation center sells 500 ounces of medical cannabis to a
dispensing organization for $200 an ounce. The cultivation center provides a
nondiscriminatory 10% discount for sales over 300 ounces. The total price with
the discount is $90,000. The tax is computed on the sales price of
$90,000.
4) There is no tax on free
samples of medical cannabis given to a dispensing organization by a cultivation
center. However, the cultivation center will incur Use Tax liability on the
cost price of the free samples of medical cannabis given to the dispensing
organization. (See 86 Ill. Adm. Code
150.305(c).)
5) The tax on a package of medical cannabis
infused product shall be based on the weight in ounces of usable cannabis as
shown on the label required by 8 Ill. Adm. Code
1000.420(e).
For purposes of computing the tax imposed by the Law on medical cannabis
infused products, the sales price is the cultivation center's average sales
price per gram of high grade cannabis flowers. The sales price shall be
determined monthly at the beginning of the month and does not change during the
month.
A) EXAMPLE 1: On January 1, the
cultivation center offers for sale to dispensing organizations 5 strains of
high quality cannabis flowers at $7, $8, $9, $10 and $11 per gram. The average
sales price is $9 per gram for January. The label on a package of medical
cannabis infused product offered for sale to a dispensing organization states
the package contains
1.25 grams of
useable cannabis. The tax on the package is
1.25 x $9 x .07,
or $0.79.
B) EXAMPLE 2: On January
9, the cultivation center offers for sale a 6th
strain of high quality cannabis flower for $15 per gram, in addition to 5
strains of high quality cannabis flowers offered on January 1 at $7, $8, $9,
$10 and $11 per gram. The average price per gram for January remains $9 and
does not change due to the addition of the 6th strain of cannabis offered for
sale during the month of January. If the cultivation center offers the same 6
strains of high quality cannabis flower on February 1, for purposes of
computing the tax for medical cannabis infused products during the month of
February, the cultivation center's average wholesale price per gram of high
grade or quality cannabis flowers is $10.
6)The tax on medical cannabis concentrate or
extract is calculated based on the sales price of the quantity (in ounces or
partial ounces) of concentrate or extract sold by a cultivation center to a
dispensing organization. The quantity for purposes of the tax is the actual
weight of the concentrate or extract contained in the package. For example, a
cultivation center sells a package containing 1 gram of hash oil to a
dispensing organization for $14. The tax on the package of hash oil is 7% of
$14, or $0.98. Concentrates and extracts include, but are not limited to, hash
oil, wax, shatter, caviar, kief, budder, bubble hash and hash.
e) A cultivation center may not
either directly or indirectly discriminate in price between different
dispensing organizations that are purchasing a like grade, strain, brand, and
quality of cannabis or cannabis-infused product. Nothing in this Part prevents
cultivation centers from pricing medical cannabis differently based on
differences in the cost of manufacture, the quantities sold, such as volume
discounts, or the way the products are delivered.
f) The Law does not exempt any sales of
medical cannabis cultivated by a cultivation center. All sales of medical
cannabis are taxable.
