In the Friday January 10, 2020 edition of the Illinois Register, the Illinois Department of Revenue proposed two new pieces of emergency rulemaking to implement taxation portions of the Illinois Cannabis Regulation and Tax Act.
The first emergency rule implements the 7% tax on cannabis cultivators in Illinois for the privilege of cultivation. The tax is imposed on gross receipts from the initial sale of the product to another cultivator or to a craft grower, infuser or dispensing organization.
The second emergency rule implements the sales tax that adult users see on their receipts for the purchase of cannabis or cannabis derivative products that many following the news of Illinois recreational marijuana laws will be familiar with – 10%of the purchase price if the product’s THC level is at or below 35%, or 25% of the purchase price if the THC level is above 35%. All infused products are taxed at 20%of the purchase price.
As with other industries, the implementing emergency regulations contain guidelines and other important information for Illinois’s cannabis cultivators and Illinois cannabis dispensaries to familiarize themselves with regarding the operation and collection of taxes. Illinois cannabis attorneys would do well to familiarize themselves with the regulations to be able to help cultivators and dispensaries navigate these issues.
The regulations for the taxation on cultivators and the public’s purchases at cannabis dispensaries delineate inter-agency notification between the Department of Revenue and the Department of Agriculture and Financial and Professional Regulation, rules for hearing and revocation of licensure following non-payment or delinquency in tax payment. The rules also explain how the tax will be computed, what required information invoices and receipts should contain, how returns and records get filed, and which sales the tax applies to and which it does not.