Which States Require Sales Tax on Cannabidiol (CBD)?

by | Jul 8, 2020

Which States Require Sales Tax on Cannabidiol (CBD)?

Thankfully, sales tax on Cannabidiol (CBD) is pretty straightforward. Most states allow you to sell CBD products as long as they are properly labeled and meet other requirements (like being extracted from hemp sources with less than 0.3% THC of dry weight). Pay particular attention to Lousiana which has a 3% excise tax on cannabidiol. 

 

Yes, CBD is outright illegal in some states. Some states, like Alabama, don’t allow the sale of CBD, whether or not it is derived from hemp or not. This doesn’t seem to stop retailers from selling their products illegally, though. If you are selling CBD products into states where it is not legal, tread with caution. 

 

Be careful if your CBD is meant to be consumed. You should also pay special attention to state laws if you are selling CBD that is intended for human consumption. Many states, like Washington, are very clear that CBD can’t be sold as food, food ingredients, or dietary supplements. Good luck explaining that your cinnamon-flavored CBD is for “topical use only”! 

 

Warning: This page might not apply for CBD derived from marijuana sources. If you are selling CBD that is derived from marijuana sources (typically meaning it has more than 0.3% dry weight TH) then additional marijuana excise taxes will likely apply. The product might also not be legal depending on the particular state.

 

Need help with CBD sales tax? We’re the experts. If you want to ensure your CBD company is compliant with sales tax, consider scheduling a free initial consultation with us by clicking here. We’d love to chat about your business and how we can help you grow without having to worry about complex government rules. 

 

Jump Ahead to Individual State Sales Tax Requirements for CBD:

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Alabama

Does Alabama require sales tax on Cannabidiol (CBD)?

❌It is generally not legal to buy or sell cannabidiol (CBD) in the state of Alabama.

Why does Alabama not require sales tax on Cannabidiol (CBD)?

Selling, delivering, or distributing CBD—other than the FDA-approved prescription drug Epidiolex—is illegal under Alabama law. To be clear, all CBD— whether above or below 3% THC—is illegal under Alabama law, except for the prescription drug Epidiolex. There are two very narrow legal defenses (Carly’s Law and Leni’s Law) that can be used by epileptic patients and their family members, however, a doctor’s prescription is required.

Where can you go to learn more?

Alabama Attorney General, Steve Marshall, has provided guidance on the legality of CBD in this public notice.

 

Arkansas

Does Arkansas require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Arkansas sales and use tax since it is generally legal to buy, sell, and possess.

Why does Arkansas require sales tax on Cannabidiol (CBD)?

It is generally legal to buy, sell, and possess Cannabidiol in Arkansas so long as the cannabidiol (CBD) does not contain more than 0.3% of tetrahydrocannabinol (THC) on a dry weight basis as verified by a nationally accredited laboratory for quality, purity, and accuracy standards; and it is not approved by the United States Food and Drug Administration (FDA) for marketing as a medication.

Where can you go to learn more?

Arkansas Bill HB1518 legalized the sale of CBD in the state.

 

Arizona

Does Arizona require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Arizona sales and use tax (TPT) since it is generally legal to buy, sell, and possess.

Why does Arizona require sales tax on Cannabidiol (CBD)?

It is generally legal to buy, sell, and possess Cannabidiol in Arizona so long as it is under 0.3% THC content. You do not need a license issued by the Department of Agriculture if you are selling, manufacturing, or marketing any post-processed hemp materials.

Where can you go to learn more?

You can learn more about Arizona’s industrial hemp program on their website and their FAQ page which confirms that CBD is legal in Arizona.

 

California

Does California require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to California sales and use tax since it is generally legal to buy, sell, and possess. If it is made from the cannabis plant (and non-industrial hemp) it is subject to California’s cannabis excise tax.

Why does California require sales tax on Cannabidiol (CBD)?

Cannabidiol (CBD) is legal in California and is subject to California’s sales and use tax. It is not subject to additional cannabis excise taxes unless it was manufactured from a plant that is deemed as “cannabis”. Industrial hemp plants do not fall under the definition of Cannabis in California. In general, CBD products made from industrial hemp are not subject to the cannabis excise tax (but are subject to sales and use tax). The California Department of Food and Agriculture (CDFA) regulates the industrial hemp industry.

Where can you go to learn more?

California’s Cannabis Tax Facts clarifies that CBD products containing “cannabis” are subject to the cannabis excise tax. California’s BPC 260001(f) specifies that industrial hemp does not fall under the definition of cannabis. California’s L-729 specifies that donated cannabis is not subject to certain taxes.

 

Colorado

Does Colorado require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Colorado sales and use tax since it is generally legal to buy, sell, and possess.

Why does Colorado require sales tax on Cannabidiol (CBD)?

Cannabidiol (CBD) is subject to Colorado sales and use tax since it is generally legal to buy, sell, and possess. If it is extracted from cannabis (and not industrial hemp) it could be subject to additional excise taxes in Colorado. Additional fees for home-rule cities may apply.

Where can you go to learn more?

Title 35 Article 61 of the Colorado Revised Statutes clarifies that industrial hemp does not fall under the definition of cannabis. Industrial hemp is defined as having no more than 0.3% THC on a dry-weight basis.

 

Connecticut

Does Connecticut require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Connecticut’s sales and use tax since it is generally legal to buy, sell, and possess.

Why does Connecticut require sales tax on Cannabidiol (CBD)?

In Connecticut, it is generally legal to sell Cannabidiol (CBD) containing products without a license as long as you are not processing or manufacturing the hemp. Legally obtained hemp and CBD products may be sold at retail without a license. CBD derived from marijuana, with a THC concentration of over 0.3% THC on a dry weight basis, is considered a schedule II controlled substance under Connecticut law.

Where can you go to learn more?

Check out Connecticut’s Hemp Manufacturing FAQ for more information.

 

Florida

Does Florida require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol is subject to Florida’s sales and use tax since it is generally legal to buy, sell, and possess.

Why does Florida require sales tax on Cannabidiol (CBD)?

The sale of CBD is generally legal in Florida and subject to sales tax as long as the THC concentration does not exceed 0.3% THC on a dry weight basis. Before hemp extract can be sold, it must be analyzed and certified by an independent testing lab to confirm that the concentrations do not exceed 0.3%. It is unclear if CBD included within a dietary supplement would be considered exempt from sales tax, and a specific letter ruling is advised.

Where can you go to learn more?

Florida Senate Bill 1020 specifically legalizes CBD hemp extracts so long as the THC content does not exceed 0.3% THC on a dry weight basis.

 

Georgia

Does Georgia require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol is subject to Georgia’s sales and use tax since it is generally legal to buy, sell, and possess.

Why does Georgia require sales tax on Cannabidiol (CBD)?

The sale of CBD is generally legal and subject to sales tax in Georgia as long as the THC concentration does not exceed 0.3% THC on a dry weight basis. Before hemp extract can be sold, it must be analyzed and certified by an independent testing lab to confirm that the concentrations do not exceed 0.3%. It is not legal to include CBD as a food or drink ingredient in Georgia. Keep in mind that Georgia greats “low THC oil” (with up to 5% THC) differently than CBD extracts, and a separate license is required to purchase/sell “low THC oil”.

Where can you go to learn more?

Georgia House Bill 213 legalized the sale of hemp extracts so long as the THC content does not exceed 0.3% THC on a dry-weight basis.

 

Hawaii

Does Hawaii require sales tax on Cannabidiol (CBD)?

✅ The sale of CBD is generally legal and subject to Hawaii’s gross receipts tax (sales tax) as long as the THC concentration does not exceed 0.3% THC on a dry weight.

Why does Hawaii require sales tax on Cannabidiol (CBD)?

The sale of CBD products in Hawaii is generally legal with certain restrictions. First, the CBD must be extracted from hemp that does not exceed 0.3% THC on a dry weight basis. Second, the CBD cannot be added to food, beverages, or cosmetics, and may not be sold as a “dietary supplement”. Hawaii also states that CBD may not be marketed by asserting health claims as it would constitute prohibited misbranding or false advertising.

Where can you go to learn more?

The Hawaii Health Department has released an FAQ on CBD as well as general information on certain marketing restrictions.

 

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Iowa

Does Iowa require sales tax on Cannabidiol (CBD)?

❌It is generally not legal to buy or sell Cannabidiol (CBD) recreationally in Iowa.

Why does Iowa not require sales tax on Cannabidiol (CBD)?

The recreational sale of Cannabidiol (CBD) in Iowa is not currently legal. If the Iowa Hemp Act passes at a future date, CBD with less than 0.3% THC could become legal. The Iowa Department of Public Health currently regulates CBD.

Where can you go to learn more?

The Iowa Department of Public Health released a position statement on the legality of CBD products here. A list of retailers who can legally sell medical CBD products is listed here.

 

Idaho

Does Idaho require sales tax on Cannabidiol (CBD)?

✅Cannabidiol (CBD) is generally legal in Idaho and subject to sales tax if it contains NO THC and is derived from one of the five identified parts of the cannabis plant.

Why does Idaho require sales tax on Cannabidiol (CBD)?

Cannabidiol (CBD) is only legal in Idaho if it meets two requirements: (1) it contains no THC and (2) it must be derived or produced from “(a) mature stalks of the plant, (b) fiber produced from the stalks, (c) oil or cake made from the seeds or the achene of such plant, (d) any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks, or (e) the sterilized seed of such plant which is incapable of germination”. In other words, the CBD must both contain zero THC and be derived from one of the five identified parts of the cannabis plant, otherwise, it is illegal in Idaho under current law.

Where can you go to learn more?

You can learn more on the Idaho Office of Drug Policy CBD webpage.

 

Illinois

Does Illinois require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Illinois sales and use tax since it is generally legal to buy, sell, and possess.

Why does Illinois require sales tax on Cannabidiol (CBD)?

According to the Illinois Industrial Hemp Act, Cannabidiol (CBD) is generally legal as long as it does not contain more than 0.3% THC “on a dry weight basis that has been cultivated under a license issued under the Act or is otherwise lawfully present in this State, and includes any intermediate or finished product made or derived from industrial hemp”. The Act also states that the department “shall permit the sale or transfer of stripped stalks, fiber, dried roots, nonviable seeds, seed oils, floral and plant extracts (excluding THC in excess of 0.3%) and other marketable hemp products to members of the general public, both within and outside the State of Illinois.”

Where can you go to learn more?

For more information on the legality of Cannabidiol in Illinois, see the Industrial Hemp Act.

 

Indiana

Does Indiana require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Indiana sales and use tax since it is generally legal to buy, sell, and possess.

Why does Indiana require sales tax on Cannabidiol (CBD)?

Cannabidiol (CBD) is generally legal in Indiana so long as it meets certain requirements. These requirements include:

  1. Certain packaging requirements, including a scannable barcode containing various information (see here for more details)
  2. The product must not contain more than 0.3% total THC, including precursors, by weight
  3. The product must either be approved by the FDA as a prescription or over the counter drug, OR the distributor has a certificate of analysis prepared by an independent testing laboratory showing:
  4.  The low THC hemp extract is the product of a batch tested by the independent testing lab AND
  5. The independent testing lab determined the batch contained no more than 0.3% total delta-9-tetrahydrocannabinol (THC).

Where can you go to learn more?

Indiana’s CBD packaging requirements can be found in IC § 24-4-21-4. Indiana Senate Enrolled Act No. 52 defines the legality of industrial hemp extracts in Indiana.

 

Kansas

Does Kansas require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Kansas sales and use tax since it is generally legal to buy, sell, and possess as long as it does not contain any THC.

Why does Kansas require sales tax on Cannabidiol (CBD)?

Cannabidiol (CBD) is subject to Kansas sales and use tax since it is generally legal to buy, sell, and possess as long as it does not contain any THC. Cannabidiol (CBD) extracts that contain any THC are not currently legal within Kansas. Businesses that sell Cannabidiol (CBD) extracts may be required to have a valid license from the Kansas Department of Agriculture. Kansas does not allow the manufacturing, marketing, or sale of CBD products that are intended for human or animal consumption.

Where can you go to learn more?

Kansas bill SB 282 amended the definition of Marijuana to exclude Cannabidiol (CBD) from its definition. Kansas bill HB 2167 specifies that products marketed or sold for human consumption (and other purposes) are not legal in Kansas.

 

Kentucky

Does Kentucky require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Kentucky sales and use tax since it is generally legal to buy, sell, and possess.

Why does Kentucky require sales tax on Cannabidiol (CBD)?

Cannabidiol (CBD) is generally legal within Kentucky as long as it is extracted from industrial hemp. Kentucky defines industrial hemp as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than three-tenths of one percent (0.3%) on a dry weight basis”.

Kentucky prohibits some CBD products including hemp cigarettes, hemp cigars, chew, dip, or other smokeless material consisting of hemp leaf material, hemp leaf material or floral material teas, whole hemp buds, ground hemp floral material, ground hemp leaf material, and any hemp product with THC concentrations above 0.3%. Basically, Kentucky doesn’t want you smoking any CBD (what a buzz kill). Kentucky should not require a license to sell CBD within Kentucky as long as the product fits within the definition of “publicly marketable hemp products”. Kentucky states that products that meet one or more of the following are considered “publicly marketable hemp products”

  1. The product does not include any living hemp plants, viable seeds, leaf materials, floral materials, or delta-9-THC content above zero and three-tenths (0.3) percent; and does include, without limitation, the following products: bare stalks, bast fiber, hurd fiber, nonviable roots, nonviable seeds, seed oils, and plant extracts (excluding products containing delta-9 THC above zero and three-tenths (0.3) percent);
  2. The product is CBD that was derived from hemp, as defined by Kentucky’s regulations; or
  3. The product is CBD that is approved as a prescription medication by the United States Food and Drug Administration.

Where can you go to learn more?

Kentucky 218A.010 (27) excludes extracts of Cannabidiol from industrial hemp plants from its definition of Marijuana. Kentucky 260.850 sets forth the definition of industrial hemp. Kentucky 302 KAR 50:030 defines “publicly marketable hemp products”. Prohibited products can be found in Chapter 50 Industrial Hemp 070 Prohibited Products.

 

Louisiana

Does Louisiana require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Louisiana sales and use tax as well as a 3% excise tax.

Why does Louisiana require sales tax on Cannabidiol (CBD)?

Louisiana charges sales tax on Cannabidiol (CBD) as well as a 3% excise tax. Louisiana’s CBD excise tax is reported on Form R-5024i. Louisiana states that any CBD product that is manufactured, distributed, imported, or sold for use in Louisiana shall: 

  1. Be produced from hemp grown by a licensee authorized to grow hemp by the United States Department of Agriculture or under an approved state plan pursuant to the Agriculture Improvement Act of 2018, P.L. 115-334, or under an authorized state pilot program pursuant to the Agriculture Act of 2014, P.L. 113-79.
  2. Be registered with the department in accordance with the State Food, Drug, and Cosmetic Law (R.S. 40:601 et seq.).
  3. Be labeled in accordance with the State Food, Drug, and Cosmetic Law
  4. Not be marketed as a dietary supplement.

The following products are not able to be sold in Lousiana:

  1. Any part of hemp for inhalation
  2. Any alcoholic beverage containing CBD
  3. Any food product or beverage containing CBD unless the United States FDA approved CBD as a food additive

Where can you go to learn more?

Louisiana Act Number 164 defines “industrial hemp” and “Industrial hemp-derived CBD products”, outlines what products are/are not allowed to be sold, and the requirements in order to manufacture, distribute, import, or sell CBD in Louisiana. Louisiana HB 138 removes hemp from the state’s definition of Marijuana.

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Still More Information on Which States Require Sales Tax on Cannabidiol (CBD)

Are you still hanging in there?  We aren’t done yet!  There is still more information on which states require sales tax on Cannabidiol (CBD). Remember, you can just follow the links at the top of the post to jump close to the information regarding any states.  

 

Massachusetts

Does Massachusetts require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Massachusetts sales and use tax since it is generally legal to buy, sell, and possess.

Why does Massachusetts require sales tax on Cannabidiol (CBD)?

Cannabidiol (CBD) is subject to Massachusetts sales and use tax since it is generally legal to buy, sell, and possess. Massachusetts is very lax in its regulation of retail sales of CBD products.

Massachusetts states that the following hemp products are allowed to be sold: 

  1. Hemp seed and hemp seed oil
  2. Hulled hemp seed and hemp seed powder
  3. Hemp protein
  4. Clothing and items made from hemp fiber
  5. Building material
  6. Non-food CBD products for human consumption that DO NOT make any medicinal/therapeutic claims on the label and are not marketed as a dietary supplement, unless the product has been approved by the FDA

Massachusetts states that the following hemp products are NOT allowed to be sold:

  1. Any food product containing CBD
  2. Any non-food product containing CBD derived from hemp that makes therapeutic and/or medicinal claims on the label, unless it has already been approved by the FDA.
  3. Any product containing CBD that is being marketed as a dietary supplement unless already approved by the FDA
  4. Animal feed that contains any hemp products, including CBD unprocessed or raw plan hemp, including flower, that is meant for end use by the consumer

Where can you go to learn more?

You can learn more about how Massachusetts handles Cannabidiol (CBD) on the FAQs: Sale of Hemp-Derived Products in the Commonwealth page.

 

Maryland

Does Maryland require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Maryland sales and use tax since it is generally legal to buy, sell, and possess.

Why does Maryland require sales tax on Cannabidiol (CBD)?

Cannabidiol (CBD) is subject to Maryland sales and use tax since it is generally legal to buy, sell, and possess as long as it is extracted from material that has less than 0.3% THC on a dry-weight basis. Maryland has stated that any food or dietary supplement products containing CBD are not legal.

Where can you go to learn more?

Maryland House Bill 803 updated the definition of marijuana to exclude industrial hemp.

 

Maine

Does Maine require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Maine sales and use tax since it is generally legal to buy, sell, and possess.

Why does Maine require sales tax on Cannabidiol (CBD)?

Maine is one of the more “CBD-friendly” states around since not only are CBD oils legal, but so are foods containing CBD. Hemp-derived Cannabidiol products (CBD) are legal so long as it is derived from industrial hemp which is defined as hemp which does not contain more than 0.3% THC on a dry-weight basis.

Where can you go to learn more?

Maine S.P. 585 defines industrial hemp and industrial hemp products.  Maine H.P. 459 – L.D. 630 specifies that foods containing hemp-derived Cannabidiol are not considered “adulterated” (and therefore generally legal).

 

Michigan

Does Michigan require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Michigan sales and use tax since it is generally legal to buy, sell, and possess.

Why does Michigan require sales tax on Cannabidiol (CBD)?

The sale of CBD products in Michigan is generally legal with certain restrictions. First, the CBD must be extracted from industrial hemp that does not exceed 0.3% THC on a dry weight basis. Second, the CBD cannot be added to food, beverages, or cosmetics, and may not be sold as a “dietary supplement”.

Where can you go to learn more?

House Bill 6330 generally legalized industrial hemp and its extracts. You can find more information on how CBD is treated in Michigan on this page.

 

Minnesota

Does Minnesota require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Minnesota sales and use tax since it is generally legal to buy, sell, and possess.

Why does Minnesota require sales tax on Cannabidiol (CBD)?

The sale of CBD products in Minnesota is generally legal with certain restrictions. First, the CBD must be extracted from hemp that does not exceed 0.3% THC on a dry weight basis. Second, retail products must follow restrictive testing and label requirements.

Where can you go to learn more?

Minnesota Statute 151.72 defines the testing and labeling requirements for Cannabidiol products. On this page, the Minnesota Department of Agriculture clarifies what CBD-containing food products can be sold (hint: not really any). Minnesota’s bill SB-12 is the primary legislation that legalized industrial hemp in the state.

 

Missouri

Does Missouri require sales tax on Cannabidiol (CBD)?

⚠️It is unclear if Cannabidiol (CBD) is generally legal in Missouri, though it is likely subject to sales tax.

Why does Missouri require sales tax on Cannabidiol (CBD)?

It is unclear whether Missouri has legalized industrial hemp extracts that contain CBD. Missouri supposedly legalized industrial hemp and its extracts with House Bill 2034 and states:

“Industrial hemp” includes industrial hemp commodities and products and 219 topical or ingestible animal and consumer products derived from industrial hemp with a 220 delta-9 tetrahydrocannabinol concentration of not more than three-tenths of one percent on a dry weight basis.

However, multiple retail locations in Missouri have been raided by police for selling illegal products. The cases were later thrown out by the judge. When it comes to sales tax, the Department of Revenue has taken a “don’t ask, don’t tell” approach. The revenue department has not approved retail sales tax registration applications that specifically indicate stores are selling CBD oil, but “may have issued new sales tax licenses to businesses that made no mention of CBD oil in their sales tax registration application,” spokeswoman Anne Marie Moy said. If you do decide to sell CBD products in Missouri, you should consider getting a license to collect and remit the tax.

Where can you go to learn more?

Missouri House Bill 2034 generally legalized industrial hemp. This article helps explain the ongoing confusion regarding CBD legality within Missouri.

 

Mississippi

Does Mississippi require sales tax on Cannabidiol (CBD)?

❌It is generally not legal to buy or sell Cannabidiol (CBD) recreationally in Mississippi.

Why does Mississippi not require sales tax on Cannabidiol (CBD)?

Cannabidiol (CBD) is generally not legal in Mississippi for recreational purposes. CBD may be legal in Mississippi if recommended by a doctor,  derived from hemp, contains no more than 0.5% THC, and contains more than 15% Cannabidiol (CBD).CBD is illegal in Mississippi under all other conditions.

Where can you go to learn more?

Under Harper Grace’s Law (HB 1231, 2014), CBD products were legalized for epilepsy or related conditions, as recommended by a licensed physician. SB 2610 defines the amendments to the Mississippi Code of 1972 that regulate the distribution of CBD.

 

Free State Audit Risk Guide

See which states pose the greatest risk to your business.

State-by-State Audit Risk Percentages

Free State Audit Risk Guide

See which states pose the greatest risk to your business.

State-by-State Audit Risk Percentages

Rhode Island

Does Rhode Island require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Rhode Island sales and use tax since it is generally legal to buy, sell, and possess.

Why does Rhode Island require sales tax on Cannabidiol (CBD)?

Like most states, Rhode Island’s framework for the regulation of CBD makes an important distinction between different types of CBD. While CBD with a high THC content can produce a psychoactive high and is consequently illegal within the state, CBD with no more than 0.3% THC is legal in Rhode Island. For the most part, CBD derived from the industrial hemp plant is legal, whereas CBD from the marijuana hemp plant remains against the law.

Where can you go to learn more?

RI 2019-H5151, also known as The Industrial Hemp Growth Act, lays out the regulations for producing, distributing, and selling hemp-based Cannabidiol (CBD) products.

 

South Carolina

Does South Carolina require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to South Carolina sales and use tax since it is generally legal to buy, sell, and possess.

Why does South Carolina require sales tax on Cannabidiol (CBD)?

CBD may be derived from marijuana or from hemp. Only hemp products are free to be used by all. Anything derived from marijuana is restricted to people diagnosed with a debilitating medical condition. South Carolina has not passed any laws to put a medical marijuana program in place, but the state passed S1035, also known as Julian’s Law, in 2014 which allowed patients to use cannabis-derived CBD only if they are diagnosed with severe forms of epilepsy.

Where can you go to learn more?

South Carolina SB1035, also known as Julian’s Law, creates an exemption for the possession and use of CBD from the criminal definition of marijuana.

 

South Dakota

Does South Dakota require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to South Dakota sales and use tax since it is generally legal to buy, sell, and possess.

Why does South Dakota require sales tax on Cannabidiol (CBD)?

Until 2020 and the passage of SB 1008, all marijuana and cannabidiol products were illegal in South Dakota. The new cultivation law allows for licensed processors to make “industrial hemp products” which are defined as “a finished manufactured product, or consumer product containing cannabidiol that is packaged for individual sale, with a delta-9 tetrahydrocannabinol concentration of not more than three-tenths of one percent, derived from or made by processing industrial hemp”. There’s not much more in the law on regulations relative to the sale of Hemp CBD products, except that the law prohibits the sale of hemp for smoking or inhaling.

Where can you go to learn more?

South Dakota HB 1008 legalizes the growth, production, and transportation of industrial hemp in the state.

 

Tennessee

Does Tennessee require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Tennessee sales and use tax since it is generally legal to buy, sell, and possess.

Why does Tennessee require sales tax on Cannabidiol (CBD)?

In 2016, Tennessee passed two regulations regarding CBD. SB 2125  amended the marijuana laws to exclude cannabis containing less than 0.6% of THC from the definition of marijuana. Later in 2016, TN passed HB 1004 which allows cannabis with 0.9% of THC or lower to be manufactured, processed, dispensed, and possessed by patients participating in research studies for seizures, cancer, and other disorders.

Where can you go to learn more?

TN Senate Bill 2125 amended the definition of marijuana. TN House Bill 1004 allows cannabis for research purposes.

 

Texas

Does Texas require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Texas sales and use tax since it is generally legal to buy, sell, and possess.

Why does Texas require sales tax on Cannabidiol (CBD)?

The Texas Department of State Health Services formally removed CBD from the Schedule I controlled substances list on April 5, 2019, following the adoption of the 2018 Hemp Farming Bill, which federally removed CBD from the category. On June 10, 2019, House Bill 1325 was passed, which established broad regulations for hemp production, cultivation, and testing. The bill sought to create rules to match the federal definition of hemp-derived CBD products. The bill limits the THC in hemp as cannabis to less than 0.3%THC.

Where can you go to learn more?

House Bill 1325 establishes the regulations for hemp production, cultivation, and testing.

 

Utah

Does Utah require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Utah sales and use tax since it is generally legal to buy, sell, and possess.

Why does Utah require sales tax on Cannabidiol (CBD)?

In 2014, Utah passed HB 105 which legalized the possession of Cannabidiol (CBD) containing less than 0.3% THC. CBD with higher concentrations of THC is allowed if the patient has a marijuana card from the Utah Department of Health Services.

Where can you go to learn more?

House Bill 105-Plant Extract Amendments legalized possession and use of CBD. House Bill 3001-Utah Medical Cannabis Act, sets out the requirements for the sale of CBD in excess of 0.3% to qualified medical patients.

 

Virginia

Does Virginia require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Virginia sales and use tax since it is generally legal to buy, sell, and possess.

Why does Virginia require sales tax on Cannabidiol (CBD)?

Hemp-derived CBD oil is legal in Virginia due to the passing of the 2018 federal Farm Bill.

Where can you go to learn more?

Virginia defines industrial hemp in § 3.2-4112. Definitions accessible here. You can learn more on about Virginia’s CBD laws in their online brief document here

 

Vermont

Does Vermont require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Vermont sales and use tax since it is generally legal to buy, sell, and possess.

Why does Vermont require sales tax on Cannabidiol (CBD)?

Hemp and cannabidiol products derived from hemp may be legally sold in Vermont. Cannabidiol is generally subject to the Vermont sales and use tax, with the exception of one form of cannabidiol that has been approved by the FDA and therefore qualifies for the drug exemption from sales tax. Most CBD products do not qualify for the Vermont sales tax exemption for drugs because they are not recognized in any of the official U.S. pharmacopeias, formularies, or their supplements, they cannot be prescribed, and they are not required to be labeled as a drug under federal regulation.

Vermont has also clarified that CBD is not exempt as a food, dietary supplement, or food ingredient. Additionally, cannabidiol that is incorporated into a taxable meal is subject to the Vermont Meals and Rooms Tax, and as a result, is exempt from sales tax.

Where can you go to learn more?

For more information on how Vermont regulates CBD see their FAQ page here. We would also like to commend Vermont for having the most comprehensive CBD sales tax guide throughout the whole country. It’s seriously great (for us sales tax nerds).

 

Washington

Does Washington require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Washington sales and use tax (as well as Business & Occupation tax) since it is generally legal to buy, sell, and possess as long as it is not for human consumption.

Why does Washington require sales tax on Cannabidiol (CBD)?

It is generally legal to buy, sell, and possess Cannabidiol (CBD) in Washington as long as it is not for human consumption. It is important to note that Washington does not allow hemp-derived CBD to be used as an ingredient in food or dietary supplements. Although CBD cannot be included in food, they do allow “hulled hemp seeds, hemp seed protein powder, and hemp seed oil, provided they comply with all other requirements”.

Where can you go to learn more?

For more information on Washington’s position on hemp-derived CBD in food click here. For more information on Washington’s Hemp program click here. For more information on Washington’s statutes regarding hemp production, click here.

 

Wisconsin

Does Wisconsin require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Wisconsin sales and use tax since it is generally legal to buy, sell, and possess.

Why does Wisconsin require sales tax on Cannabidiol (CBD)?

According to the DATCP, a special license is not required to sell hemp-derived products such as CBD, though “licenses from other programs or departments may be required.” For example, retailers must secure a sales tax permit from the Department of Revenue. Wisconsin defines hemp as “the plant cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 THC concentration of not more than 0.3 percent on a dry weight basis”. Cannabidiol (CBD) would be considered a hemp product since it is a derivative/extract of the Sativa L. plant. Wisconsin has various labeling requirements for CBD that you should keep in mind before selling your product.

Where can you go to learn more?

For information on Wisconsin’s CBD labeling requirements see their Labeling Requirements Fact Sheet and their Method of Sale and Labeling Fact Sheet. For more information on Wisconsin’s licensing and processing requirements, see their FAQ Fact Sheet here.

 

West Virginia

Does West Virginia require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to West Virginia sales and use tax since it is generally legal to buy, sell, and possess.

Why does Washington require sales tax on Cannabidiol (CBD)?

The retail sale of hemp-derived Cannabidiol (CBD) is subject to sales and use tax since it is generally legal to buy, sell, and possess. An additional permit might be needed in order to legally sell derivative products of industrial hemp. West Virginia defines industrial hemp as “all parts and varieties of the plant Cannabis sativa L. and any part of the plant, including the seeds of the plant and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not with no greater than 0.3% tetrahydrocannabinol, or the THC concentration for hemp defined in 7 U.S.C. § 5940, whichever is greater”.

Where can you go to learn more?

You can find more information on CBD laws in West Virginia in Article 12E. Industrial Hemp Development Act.

 

Wyoming

Does Wyoming require sales tax on Cannabidiol (CBD)?

✅ Cannabidiol (CBD) is subject to Wyoming sales and use tax since it is generally legal to buy, sell, and possess.

Why does Wyoming require sales tax on Cannabidiol (CBD)?

Cannabidiol (CBD) is subject to Wyoming sales and use tax since it is generally legal to buy, sell, and possess. In order for CBD retail sales to be legal, it must have “a THC concentration of not more than three‑tenths of one percent (0.3%) on a dry weight basis when using post‑decarboxylation or another similarly reliable testing method”.

Where can you go to learn more?

Wyoming legalized the retail sale of hemp-extracted Cannabidiol (CBD) with HB0171.

Disclaimer: Our attorney wanted you to know that no financial, tax, legal advice or opinion is given through this post. All information provided is general in nature and may not apply to your specific situation and is intended for informational and educational purposes only. Information is provided “as is” and without warranty.

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