Adult-use cannabis products excise tax

If you’re an adult-use cannabis products distributor, you must pay an excise tax on your sales of adult-use cannabis products to adult-use cannabis products retailers. If you’re an adult-use cannabis products retailer, you must pay a retail excise tax on the adult-use cannabis products you sell or transfer to retail customers.

Before you begin distributing or selling adult-use cannabis products, you must register with the Tax Department. If you’re not a licensed distributor or retailer, you must first apply for an adult-use cannabis license with the New York State Office of Cannabis Management.

Note: Please be advised that no adult-use retail licenses have been issued and, therefore, there are currently no authorized retail sales of adult-use cannabis products.

Licensing, registration, and renewal

Step 1: Apply for a license with the Office of Cannabis Management

You must apply for—and receive—an adult-use cannabis license with the Office of Cannabis Management before you register with the Tax Department and begin distributing or selling adult-use cannabis products.

Step 2: Register with the New York State Tax Department

The Tax Department’s Adult-Use Cannabis Registration application is here!

For information on how to register, see our Adult-Use Cannabis Registration application demo.

If you distribute adult-use cannabis products or make sales of adult-use cannabis products at retail, you must register with the Tax Department:

after receiving the adult-use cannabis license from the Office of Cannabis Management that allows you to distribute adult-use cannabis products or sell adult-use cannabis products at retail, and
before doing business.

To register, apply online for an Adult-Use Cannabis Certificate of Registration. The application fee is $600. If you have fixed and final New York State liabilities, you must resolve them before we can approve your application. You may contact the Tax Department to determine if you have any outstanding liabilities, or view them in your Online Services account. To pay any outstanding liabilities, see: Pay a bill or notice.

To apply:

Log in to your Business Online Services account (or create one).
Select the ≡ Services menu in the upper-left corner of your Account Summary homepage.
Select Registrations and account updates, then select Business registrations from the expanded menu.

Once your application is approved, the Tax Department will email you instructions on how to print your Form MT-222.7, Adult-Use Cannabis Certificate of Registration.

Renewing your Adult-Use Cannabis Certificate of Registration

An Adult-Use Cannabis Certificate of Registration is valid until the date printed on it, unless it has been suspended or revoked earlier. You must renew your registration prior to the printed expiration date. The renewal fee is $600.

Step 3: Determine if you need to register for a sales tax Certificate of Authority

If you sell any tangible personal property anywhere in New York State, you must register with the Tax Department and obtain a Certificate of Authority, collect tax, and report these sales as instructed on your sales tax returns. Sales of products to your customers, including, but not limited to:

lighters
rolling papers, and
pipes

are sales of tangible personal property subject to sales tax throughout New York State. For more information, see Tax Bulletin Do I Need to Register for Sales Tax? (TB-ST-175) and Tax Bulletin How to Register for New York State Sales Tax (TB-ST-360).

Tax rates

The excise tax is imposed at the following rates:

five-tenths of one cent (.005) per milligram of the amount of total THC for cannabis flower;
eight-tenths of one cent (.008) per milligram of the amount of total THC for concentrated cannabis; and
three cents (.03) per milligram of the amount of total THC for cannabis edible product.

If you make retail sales of adult-use cannabis products, a retail excise tax of 13% on the amount charged for the sale or transfer is imposed.

Filing returns and paying tax

If you are an adult-use cannabis products distributor or an adult-use cannabis products retailer, you must:

file quarterly tax returns showing the total amount of tax due for the quarters ending May, August, November, and February;
file and pay the tax due no later than the 20th day of the month following the end of each quarter; and
file a return even if there are no sales during the quarter.

Reporting periods and due dates
Quarterly period	Filing due date
March 1–May 31	June 20
June 1–August 31	September 20
September 1–November 30	December 20
December 1–February 28 (29 if leap year)	March 20

If the due date falls on a Saturday, Sunday, or legal holiday, the return is due on the next business day.

Information

Exemptions

The taxes imposed on adult-use cannabis products do not apply to sales to a person holding a cannabis research license under the Cannabis Law.

A cannabis research license permits a licensee to produce, process, purchase, and/or possess cannabis for the following limited research purposes:

to test chemical potency and composition levels;
to conduct clinical investigations of cannabis-derived drug products;
to conduct research on the efficacy and safety of administering cannabis as part of medical treatment; and
to conduct genomic or agricultural research.

Recordkeeping

You must maintain complete and accurate records containing all the information you need to properly prepare your adult-use cannabis products tax returns and to verify their accuracy if you are audited by the Tax Department. This includes, but is not limited to:

the total THC content of the adult-use cannabis products sold or produced; and
complete records of every sale of adult-use cannabis products.

You must retain all records for three years after the due date of the return they relate to or the date you file the return, whichever is later.

Penalties

Penalty for failure to obtain a Certificate of Registration

If you’re required to obtain a Certificate of Registration and do not, you will be subject to a penalty of $500 for each month, or part of a month, during which you possess adult-use cannabis products without a certificate, up to $10,000.

Penalty for recordkeeping violations

Every adult-use cannabis products distributor and adult-use cannabis products retailer who fails to maintain or make available required records is subject to a penalty up to $500 for each month or part of a month in which the failure occurs.

Penalty for illicit cannabis

If you’re an adult-use cannabis products distributor or an adult-use cannabis products retailer who is required to obtain a Certificate of Registration, and who is determined to have possessed or sold illicit cannabis, your Certificate of Registration will be revoked for:

one year for the first such sale or possession,
three years for a second such sale or possession within five years, and
five years for a third such sale or possession within five years.

Any person knowingly in possession of or having control over illicit cannabis, after notice and an opportunity for a hearing, is liable for a civil penalty of not less than:

$200 per ounce of illicit cannabis flower,
$5 per milligram of the total weight of any illicit cannabis edible product,
$50 per gram of the total weight of any product containing illicit cannabis concentrate, and
$500 per illicit cannabis plant.

The penalty for a first violation cannot exceed:

$400 per ounce of illicit cannabis flower,
$10 per milligram of the total weight of any illicit cannabis edible product,
$100 per gram of the total weight of any product containing illicit cannabis concentrate, and
$1,000 per illicit cannabis plant.

For a second and subsequent violation occurring within three years following a prior violation, any person will be liable for a civil penalty of not less than:

$400 per ounce of illicit cannabis flower,
$10 per milligram of the total weight of any illicit cannabis edible product,
$100 per gram of the total weight of any product containing illicit cannabis concentrate, and
$1,000 per illicit cannabis plant.

The penalty for a second or subsequent violation cannot exceed:

$500 per ounce of illicit cannabis flower,
$20 per milligram of the total weight of any illicit cannabis edible product,
$200 per gram of the total weight of any product containing illicit cannabis concentrate, and
$2,000 per illicit cannabis plant.

Definitions

Adult-use cannabis products or adult-use cannabis means cannabis, concentrated cannabis, and cannabis-infused products for use by a person 21 years of age or older. It does not include medical cannabis or cannabinoid hemp product.

Adult-use cannabis products retailer means any person who is licensed by the Office of Cannabis Management to sell adult-use cannabis products at retail.

Adult-use cannabis products distributor means any person who is licensed by the Office of Cannabis Management to distribute and sell adult-use cannabis products to a person who sells such products at retail.

Cannabis edible product means a product containing either Cannabis or concentrated cannabis and other ingredients, intended for use or consumption through ingestion, including sublingual or oral absorption.

Cannabis flower means the flower of a plant of the genus Cannabis that has been harvested, dried and cured but has not undergone any processing whereby the plant material is transformed into a concentrate, including but not limited to, concentrated cannabis, or into an edible or topical product containing cannabis or concentrated cannabis and other ingredients. Cannabis flower excludes leaves and stem.

Concentrated cannabis means the separated resin, whether crude or purified, obtained from cannabis; or a material, preparation, mixture, compound or other substance which contains more than three percent by weight or by volume of total THC.

Illicit cannabis means and includes cannabis flower, concentrated cannabis, cannabis edible product, and cannabis plant on which any tax required to have been paid has not been paid. Illicit cannabis does not include any cannabis lawfully possessed.

Person means every individual, partnership, limited liability company (LLC), society, association, joint stock company, corporation, estate, receiver, trustee, assignee, referee, and any other person acting in a fiduciary or representative capacity, whether appointed by a court or otherwise, and any combination of the foregoing.

Sale means any transfer of title, possession, or both, exchange or barter, rental, lease or license to use or consume, conditional or otherwise, in any manner or by any means whatsoever for a consideration or any agreement therefor.

THC means Delta-9-tetrahydrocannabinol; Delta-8-tetrahydrocannabinol; Delta-10-tetrahydrocannabinol; and the optical isomer of such substances.

Total THC means the sum of the percentage by weight or volume measurement of tetrahydrocannabinolic acid multiplied by 0.877, plus the percentage by weight or volume measurement of THC.

Frequently asked questions

Can I register for the adult-use cannabis products tax if I have not received my adult-use cannabis license?

No. You must have a valid license from the Office of Cannabis Management before you can apply.

Who’s required to register with the Tax Department as an adult-use cannabis products distributor?

You must register as an adult-use cannabis products distributor if you sell or transfer adult-use cannabis products to an adult-use cannabis products retailer.

Who’s required to register with the Tax Department as an adult-use cannabis products retailer?

You must register as an adult-use cannabis products retailer if you sell adult-use cannabis products to an adult-use cannabis products consumer.

Who’s required to register with the Tax Department as both an adult-use cannabis products distributor and an adult-use cannabis products retailer?

You must register as both an adult-use cannabis products distributor and retailer if you sell or transfer adult-use cannabis products to an adult-use cannabis products retailer and sell adult-use cannabis products to an adult-use cannabis products consumer.

Who’s required to file an adult-use cannabis products tax return?

You must register for the adult-use cannabis products tax and file returns with the Tax Department if you are:

an adult-use cannabis products distributor that sells adult-use cannabis products to an adult-use cannabis products retailer, and/ or
an adult-use cannabis products retailer that sells or transfers adult-use cannabis products to a retail customer.

Do I need to register for a sales tax Certificate of Authority?

If you plan to sell taxable tangible personal property or provide taxable services, you must apply for your certificate at least 20 days before beginning business.

Can a tax professional register on behalf of an adult-use cannabis products distributor or retailer?

No. Tax professionals cannot apply for an Adult-Use Cannabis Certificate of Registration on behalf of their clients.

Resources

Updated: June 28, 2022