New York Cannabis Tax Rates and Filing Requirements

New York taxes adult-use cannabis with a 13% retail excise tax at the register (9% to the state, 4% to the locality) and a separate 9% wholesale excise tax that distributors pay when they sell to retailers. Cannabis sales are exempt from the regular state and local sales tax, so those excise taxes are the entire state and local tax picture.¹ Medical cannabis is taxed differently, at a lower rate, and the rules for operators extend well beyond what the state collects.

What Consumers Pay at the Register

Every purchase at a licensed adult-use dispensary carries a flat 13% excise tax on top of the shelf price. The retailer collects the full amount and remits it to the state. The 9% portion stays with the state; the 4% portion flows back to the county and municipality where the sale happened.¹

There is no additional state sales tax layered on top. Cannabis is specifically exempt from the standard sales tax that applies to most consumer goods in New York, so the 13% you see on the receipt is the whole bill.

What Distributors Pay

Before product reaches the shelf, the distributor owes a 9% excise tax on the price charged to the retailer. This wholesale tax is set under Tax Law § 493 and sits entirely on the distributor; retailers do not pay it, and it is separate from the 13% collected at retail.²

Vertically integrated license holders are handled differently. If a business holds a microbusiness license, or is a Registered Organization with Dispensing authorization selling directly to consumers, the 9% wholesale tax applies to 75% of the final retail price rather than to an internal transfer price.³ That stops integrated operators from understating a wholesale valuation to shrink their tax bill.

The current 9% wholesale tax replaced the earlier THC potency tax effective June 1, 2024. Returns filed under the old potency rates for periods before that date remain valid; the percentage tax applies only to sales on or after June 1, 2024.¹

Medical Cannabis Is Taxed Separately

Medical cannabis does not carry the 13% adult-use rate. Registered organizations that sell medical cannabis to certified patients or their designated caregivers pay a 3.15% excise tax on gross receipts from those sales.⁴ The organization absorbs it rather than listing it as a separate line on the patient’s receipt.

How the Local 4% Is Divided

The 4% local excise tax stays in the community where the sale occurred, but it is not all paid to one government. The county receives 25% of the local revenue. The remaining 75% goes to the city, town, or village hosting the dispensary. When both a town and a village within that town allow adult-use sales, they must negotiate a revenue-sharing agreement; absent one, the revenue splits evenly.⁵

Not every municipality participates. Cities, towns, and villages had until December 31, 2021 to pass a local law opting out of adult-use retail dispensaries, on-site consumption licenses, or both. Opt-out municipalities receive no local cannabis tax revenue from dispensary sales. A municipality may reverse its opt-out by repealing that local law, but it cannot newly opt out after the deadline.⁵

Filing Requirements for Cannabis Businesses

Distributors and retailers both file quarterly returns through the Department of Taxation and Finance’s online portal. There is no paper filing option. You log in to your Business Online Services account, select “Other taxes,” and choose “Adult-use cannabis products tax web file.”¹

The quarterly periods and due dates are:

March 1 through May 31: return due June 20
June 1 through August 31: return due September 20
September 1 through November 30: return due December 20
December 1 through February 28 (or 29): return due March 20

When a due date falls on a weekend or legal holiday, the deadline shifts to the next business day. A return is required even for a quarter with no sales. Payment runs through the same online session, and late filings trigger penalties and interest.¹

Federal Income Tax Still Applies, and It Can Be Steep

The state excise taxes are only one layer. Under Internal Revenue Code Section 280E, businesses trafficking in Schedule I or II controlled substances cannot deduct ordinary business expenses such as rent, payroll, or marketing from federal income tax. For cannabis operators that has historically produced effective federal rates that could exceed 70% of gross profit, with only cost of goods sold available as an offset.⁶

On April 28, 2026, the DEA finalized a rule rescheduling marijuana from Schedule I to Schedule III for FDA-approved products and state-licensed medical marijuana businesses.⁷ Treasury confirmed that the rescheduling removes the 280E barrier for businesses whose activities no longer involve Schedule I or II substances as a result of the order, with a transition rule treating the relief as applying to the business’s full taxable year that includes the effective date.⁸

The relief covers state-licensed medical cannabis operations, not adult-use retail. A New York business selling both would need to separate those activities for federal tax purposes. Adult-use-only operations remain subject to 280E until further federal action addresses recreational cannabis.

1
Department of Taxation and Finance. Adult-Use Cannabis Products Tax
2
New York State Senate. New York State Tax Law 493 – Imposition of Tax
3
New York State Office of Cannabis Management. How Adult-Use Cannabis Taxes Support Your Community Fact Sheet
4
New York State Senate. New York State Tax Law 490 – Excise Tax on Medical Cannabis
5
New York State Office of Cannabis Management. Localities
6
Taxpayer Advocate Service. Despite Operating Legally in Many States, Marijuana-Related Businesses Face Significant Federal Income Tax Law Challenges
7
Federal Register. Schedules of Controlled Substances – Rescheduling of Food and Drug Administration Approved Products Containing Marijuana From Schedule I to Schedule III
8
U.S. Department of the Treasury. Treasury, IRS Announce Process for Tax Guidance Following DOJ Rescheduling