This tax regulatory report provides detailed analysis and comparison of existing tax systems in each state of the US relatively to cannabis vaping products. Report includes a complete list of definitions of cannabis, hemp, cannabis vaping products, taxation rules in each state and additional visual data charts for understanding insights about tax burden and end-user prices.
This report will be useful for existing and new brands, manufacturers, distributors and market analysts engaged in cannabis business in the USA. In the report, sales, excise and special taxes and calculated tax burden for different categories of vaping products are reviewed.
The main product categories, which have been analyzed in this report in scope of tax burden and end-user price, are:
- Prefilled pods and 510 cartridges, prefilled disposables (closed systems) containing cannabinoids CBD/THC;
- Bottled CBD E-liquid;
- Bottled THC/CBD mix E-liquid;
- Empty vaporizers, vaporizer batteries and vaporizer parts (open systems).
- CBD-derived products: hemp flowers, oils.
Currently there are no federal taxes common for cannabis products, although the legislation is being revised. The major features of cannabis business in the USA are tight regulation and high taxation. Government taxes imposed on cannabis vape products vary greatly due to the gradual state by state legalization of cannabis for various purposes. Each state has developed its own independent taxation systems for cannabis products, attention should be paid to the definitions applied and categories of products included in it.
Cannabis products and related devices are subjected to excise (wholesale and retail), state and local sales taxes.
Excise Taxes
Excise taxes are imposed on medical cannabis (13 states and District of Columbia); recreational cannabis (15 states); hemp-derived CBD (Louisiana). Five more states have agreed to apply excise taxes to recreational cannabis in the next few years. Two states have levied excise taxes on medical cannabis recently (from January 1, 2022).
State sales taxes
- State sales taxes are levied for medical cannabis (19 states and District of Columbia); recreational cannabis (17 states); hemp-derived CBD and related devices (all of the states).
- The highest tax regime is implemented for recreational cannabis products, the tax rates varying greatly from state to state (the average value is about 22%).
- Final product taxes for medical cannabis are not applied in many states. Empty devices and parts are taxed as tangible property and are taxed at the ordinary tax rate.
Table of Contents
- Executive Summary
- Upcoming Changes in the US Excise Taxes for Cannabis Products
- Taxation Imposed on Cannabis-Based Products in the US States
- Taxation Imposed on Cannabis Vaping Devices in the US States
- The US States Sales Taxes by Cannabis Product Categories
- References
- Appendix A. The US Regulatory Acts Definitions for Cannabis Products
- Appendix B. Excise Taxes for Cannabis End-Products in the United State
- Appendix C. The US Taxation Imposed on Cannabis Final Products
List of Charts
Chart 1. Shelf Prices and Taxation for Vape Devices and Consumables Prefilled with Cannabis Oils for Recreational Use Within the States of the US
Chart 2. Shelf Prices and Taxation for Empty Cannabis Vaporizers and Parts in the US States
Chart 3. The US Hemp-Derived CBD Products Taxation
List of Tables
Table 1. Drafts on the Federal Excise Taxes
Table 2. The US Regulatory Acts Definitions for Cannabis Products
Table 3. Excise Taxes for Cannabis End-Products in the United States
Table 4. The US Taxation Imposed on Cannabis Final Products
