Illinois Administrative Code › Title 86 - REVENUE › Part 429 - MEDICAL CANNABIS CULTIVATION PRIVILEGE TAX LAW › Section 429.110 - Nature and Rate of Tax

Current through Register Vol. 48, No. 28, July 12, 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.