Why Are Illinois Dispensaries So Expensive?

High Taxes on Illinois Dispensaries

One of the most significant factors driving up the price of cannabis in Illinois is the state’s tax structure. Illinois imposes multiple layers of taxes on cannabis, which can lead to a total tax burden of 20% to 40% or more on the final retail price of cannabis products.

• Excise Tax: The Purchaser Excise Tax is tiered based on THC content. Products with less than 35% THC are taxed at 10%, those with more than 35% THC at 25%, and cannabis-infused products (like edibles and beverages) are taxed at 20%.

• State Sales Tax: In addition to the excise tax, Illinois charges a 6.25% Retailers’ Occupation Tax (ROT) on all adult-use cannabis sales.

• Local Taxes: On top of state taxes, local municipalities and counties can add their own taxes—up to 3% for cities and 3.75% in unincorporated areas. These local taxes further drive up the price of cannabis in certain areas, such as Chicago and Cook County, where the combined tax burden can exceed 40%.

These heavy taxes are passed down the supply chain and ultimately impact the consumer price at dispensaries.

Limited Supply and High Demand

Illinois is one of the largest cannabis markets in the U.S., but the state’s regulatory framework has led to a limited number of licensed dispensaries and cultivators. When cannabis became legal for recreational use in 2020, demand surged, but the supply has not kept up due to strict licensing processes and delays in scaling production. This imbalance between supply and demand drives prices up, especially for premium products like high-THC flower and concentrates.

Additionally, cultivators in Illinois face high operating costs due to the strict regulations around cultivation, distribution, and quality control, all of which add to the price of cannabis before it reaches dispensaries.

Conclusion

Illinois dispensaries are expensive primarily because of the state’s high taxes, limited supply of cannabis, and the regulatory costs associated with running a dispensary. While prices are high, they reflect the financial pressures dispensaries face to remain compliant and profitable in a highly regulated market. Consumers looking to save may consider purchasing from neighboring states with lower tax burdens, though Illinois dispensaries continue to offer a legal, regulated option for cannabis buyers.

If you are unsure about the taxation impact, you can reach out to us today. Our dedicated team at Pro Tax Services actively provides expertise in cannabis taxation.