Excise tax on medical marijuana
As part of the Compassionate Care Act that was signed into law in July 2014, the Tax Law was amended to impose Article 20-B, Excise Tax on Medical Marijuana.
More information about the Compassionate Care Act
The Compassionate Care Act established a medical marijuana program. The program is administered by the New York State Department of Health (DOH), which has approved five registered organizations to manufacture and dispense medical marijuana in New York State beginning in January 2016. For more information about the program, see About the Medical Marijuana Program on the DOH website (http://www.health.ny.gov/).
What is the excise tax on medical marijuana
The excise tax on medical marijuana is a seven percent (7%) tax on the gross receipts from medical marijuana sold or furnished by a registered organization to a certified patient or designated caregiver. The tax is imposed on the registered organization, which must pay it to the Tax Department. The tax may not be added as a separate charge or line item on a sales slip, invoice, receipt or other statement or memorandum of the price given to the retail customer.
Gross receipt means the amount charged by a registered organization for the sale or furnishing of medical marijuana to a certified patient or designated caregiver, without any deduction for:
- the cost of materials, labor, or services;
- other costs, interest, or discount paid; or
- any other expenses.
How to file returns and pay the tax
Each registered organization must have an Online Services business account and use the Medical Marijuana Web File application to file returns and pay the excise tax on a monthly basis. (See Online Services for more information on establishing an Online Services account.)
When completing the return, gross receipts must be reported by the county where the medical marijuana was manufactured and the county where it was dispensed. For medical marijuana that was delivered to a certified patient or designated caregiver’s home, gross receipts must be attributed to the county where the dispensing facility is located. The gross receipts should match the amounts the registered organization reported to DOH for that month. If the amounts do not match, the organization should report any discrepancies to DOH before filing the return.
Payment cannot be made using the Web File application, but must be made by sending a check or money order to the Tax Department. Each registered organization must print Form MT-220-V, Payment Voucher for Medical Marijuana Excise Tax Return, from the Web File application and mail it with their payment to the address provided.
To avoid penalty and interest, the envelope with the voucher and payment must be postmarked by the due date of the return.
When returns are due
Returns must be filed and the tax paid no later than the 20th day of the month following the month in which the medical marijuana was sold or furnished - for example, a November return is due on December 20th.
If the due date falls on a Saturday, Sunday, or legal holiday, the return is due on the next business day.
Note: A return must be filed even if the organization had no sales during the month.
Penalty and interest
Registered organizations must file their returns and pay the tax due by the due date to avoid penalty and interest. Organizations that file or pay late can compute the penalty and interest due using our Penalty and Interest Calculator.
In addition to any recordkeeping requirements in the Public Health Law or regulations, registered organizations must maintain a record of gross receipts subject to tax for each transaction. These records must identify:
- the date of the transaction,
- the county where the medical marijuana was manufactured,
- the county where the medical marijuana was dispensed, and
- the amount charged for the medical marijuana.
Registered organizations must keep all records for a minimum of three years from the due date of the return to which those records relate, or the date the return is filed, if later. They must make the records available to the Tax Department upon request.
Registered organizations are also subject to other state and federal tax requirements. For more information on New York State tax requirements, see:
- TSB-M-16(1)M, Tax Requirements for New York Medical Marijuana Registered Organizations, and
- Publication 20, New York State Tax Guide for New Businesses.