What is the Municipal Cannabis Retailers' Occupation Tax (MCAN)?
Adult use cannabis is subject to the 6.25% State Retailers' Occupation Tax as well as local retailers' occupation taxes in the same manner as other general merchandise. In addition, the Municipal Cannabis Retailers' Occupation Tax Law authorizes municipalities to impose, by ordinance, a local retailers' occupation tax on all persons engaged in the business of selling adult use cannabis at retail in the municipality on the gross receipts from sales of adult use cannabis (medical cannabis is excluded from this local cannabis-specific tax).
Who receives MCAN tax distributions?
Only those municipalities that have imposed the tax under the Municipal Cannabis Retailers' Occupation Tax Law by local ordinance or resolution receive distributions of MCAN.
Is voter approval required before implementation?
No. Voter approval is not required to implement this tax.
What must a municipality do to establish, change, or discontinue this tax?
The corporate authorities (e.g. city council or village board) of the municipality must adopt an ordinance or resolution to impose, discontinue, or change the rate of a Municipal Cannabis Retailers' Occupation Tax. Once an ordinance or resolution has been adopted, the municipality must file a certified copy of the ordinance with the Illinois Department of Revenue's (IDOR) Local Tax Allocation Division (LTAD).
What is the deadline for filing an ordinance?
The ordinance must be filed with LTAD on or before April 1 for the imposition, discontinuation, or tax rate change to take effect July 1, or on or before October 1 for the imposition, discontinuation, or tax rate change to take effect January 1 of the following year.
What tax rate can be imposed?
MCAN may be imposed in ¼ percent increments and may not exceed 3 percent.
Who administers this tax?
IDOR is responsible for administering MCAN.
Are medical cannabis sales subject to this tax?
No, MCAN only applies to sales of adult use cannabis. Medical cannabis sales are not subject to MCAN.
"Adult use" cannabis is cannabis intended for recreational adult use without a prescription. "Medical" cannabis is cannabis intended for medicinal use to treat or alleviate a registered qualifying patient's debilitating medical condition or symptoms associated with the patient's debilitating medical condition. Adult use or medical cannabis may be
- dried in its physical form to smoke; or
- in another physical form after extraction from the cannabis plant, such as hash, ice wax, bubble hash, oil, wax, budder, pie crust, taffy, shatter, nectar, caviar, and kief, regardless of how it is packaged or intended to be used; or
- infused or combined with another product.
When will we receive the first MCAN tax disbursement?
For taxes imposed effective January 1, the first disbursement will be made to the municipality during the following April. For taxes imposed effective July 1, the first disbursement will be made to the municipality during the following October.
Are there any other facts you should know?
An administrative fee is retained by the state treasurer to cover the costs we incur administering taxes imposed by municipalities.
Providers are allowed to take a discount for timely filing and payment of these taxes. Any allowable discount that is taken is reflected in the local government distributions that are made.
What financial information is available to the local government?
Local governments that impose MCAN may enter into a Reciprocal Agreement on Exchange of Information with IDOR. This agreement allows designated individuals within the municipality to receive specific financial information. Additional information regarding the Reciprocal Agreement on Exchange of Information can be found here.
How can a municipality contact LTAD?
You may contact LTAD through your MyLocalTax account or by using the contact information below.LOCAL TAX ALLOCATION DIVISION (3-500)
ILLINOIS DEPARTMENT OF REVENUE
101 W JEFFERSON
SPRINGFIELD IL 62702
217 785-6527 FAX