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FY 2027-06, November 2026

Municipal and County Cannabis Retailers’ Occupation Tax Rate Changes, Effective January 1, 2027

To: All dispensaries engaged in the business of selling adult use cannabis at retail in taxing jurisdictions that have enacted Municipal or County Cannabis Retailers’ Occupation Taxes

Effective January 1, 2027, certain taxing jurisdictions have, by ordinance, imposed or changed their Municipal or County Cannabis Retailers’ Occupation Tax on the gross receipts from sales of adult use cannabis (65 ILCS 5/8-11-23; 55 ILCS 5/5-1006.8). These taxes are in addition to Illinois Retailers’ Occupation Tax (35 ILCS 120/3-10, 14) on general merchandise (6.25%) and any locally-imposed retailers’ occupation tax on general merchandise, which also apply to sales of adult use cannabis.

What is taxed?

Municipal and County Cannabis Retailers’ Occupation Taxes are imposed on gross receipts from adult use cannabis sold at retail. These taxes, however, are not imposed on cannabis purchased under the Compassionate Use of Medical Cannabis Program Act.

What is the tax rate that counties and municipalities can impose by ordinance on retail sales of cannabis?

Municipalities may impose a tax on retail sales of cannabis, other than medical cannabis, at a rate that may not exceed 3%, imposed in one-quarter percent (0.25%) increments. Counties may impose a tax (also in one-quarter percent increments) on retail sales of cannabis, other than medical cannabis, at the following rates:

  • In unincorporated areas of the county, the rate may not exceed 3.75%.
  • In a municipality located in the county, the rate may not exceed 3%.

For implementation of the tax by the Illinois Department of Revenue (IDOR), municipalities and counties must submit their ordinances to IDOR by April 1 for July 1 implementation and by October 1 for implementation on the following January 1.

What counties and municipalities are imposing tax rate changes effective January 1, 2027?

The following municipality is imposing Municipal Cannabis Retailers’ Occupation Tax:

  • Bourbonnais

No counties are imposing County Cannabis Retailers’ Occupation Tax effective January 1, 2027.

Adult use cannabis is taxed at the general merchandise 6.25% tax rate applicable in the jurisdiction in which the dispensary is located plus any additional municipal and county cannabis retailers’ occupation taxes. “Adult use cannabis” means cannabis subject to tax under the Cannabis Cultivation Privilege Tax Law and the Cannabis Purchaser Excise Tax Law and does not include cannabis subject to tax under the Compassionate Use of Medical Cannabis Program Act. 35 ILCS 120/2-10; see also 35 ILCS 120/2-5(49), 14.

You must adjust your cash register and any computer program so that beginning on January 1, 2027, you will collect and pay the correct tax rate.

To verify your new combined state and local retailers’ occupation tax rates (i.e. State and local taxes) on adult use cannabis, go to the MyTax Illinois Tax Rate Finder and select rates for January 2027.

What form must I use to report Cannabis Dispensary Tax?

Cannabis dispensaries must file form CD-1, Cannabis Dispensary Tax Return, to report sales of medical and adult use cannabis. Multiple site dispensaries must also file Schedule CD-2, Sales and Use Tax Multiple Site Form for Cannabis Dispensaries, to calculate the Sales and Use Tax due on sales of adult use and medical cannabis from each dispensing site. Multiple site dispensaries must also file Schedule CD-3, Cannabis Purchaser Excise Tax Multiple Site Form for Cannabis Dispensaries, to report sales of adult use cannabis subject to Cannabis Purchaser Excise Tax from each dispensing site.

Dispensaries are also required to report their total receipts of cannabis and non-cannabis products sold on Form ST-1, Sales and Use Tax and E911 Surcharge Return. Receipts from cannabis sales should be claimed as a deduction on Schedule A of Form ST-1 and reported on Form CD-1.

Cannabis returns, along with any payment owed, are due on or before the 20th day of the month following the end of the reporting period. If the due date falls on a weekend or holiday, the return and payment are due the next business day.

Where can I find more information?

For more information about Municipal and County Cannabis Retailers’ Occupation Taxes, visit the Cannabis Taxes Information Page.

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FY 2027-06 (N-11/26)

This bulletin is written to inform of recent changes; it does not replace statutes, rules and regulations, or court decisions.