Connecticut Marijuana Tax System Changes October 1, Replacing THC-Based Taxes With Flat 10.75% Rate
- Starting October 1, Connecticut will replace its potency-based marijuana tax system with a flat 10.75% tax on retail cannabis sales as per Public Act 26-68 signed by Governor Ned Lamont.
- The new tax rate replaces varying taxes based on THC content and product type, applying uniformly in addition to the 6.35% general sales tax and 3% municipal marijuana tax, totaling 20.1% of the product’s pre-tax price.
- Medical marijuana sales remain exempt from the statewide marijuana tax, and the tax will no longer increase with higher THC levels, simplifying the taxation framework.
- From fiscal years 2027-2028, 70% of statewide marijuana tax revenues will be allocated to the Social Equity and Innovation Account to support affected communities, while the General Fund’s share decreases from 10% to 5%.
Connecticut will overhaul how it taxes recreational marijuana beginning October 1, replacing its potency-based tax system with a flat 10.75% tax on retail cannabis sales.
The change was included in Public Act 26-68, a budget adjustment measure signed by Governor Ned Lamont on May 26. The Connecticut Department of Revenue Services says the new system applies to all qualifying marijuana sales occurring on or after October 1.
Under the current system, Connecticut’s statewide marijuana tax varies depending on the type and THC content of a product. Marijuana flower is taxed at 0.625 cents per milligram of THC, edibles at 2.75 cents per milligram and other marijuana products at 0.9 cents per milligram.
Beginning October 1, those three rates will disappear and be replaced by a tax equal to 10.75% of the product’s sales price, regardless of its THC content.
The new 10.75% tax will be imposed in addition to Connecticut’s existing 6.35% general sales tax and 3% municipal marijuana tax. Together, the three percentage-based taxes will amount to 20.1% of a product’s pre-tax sales price.
For example, a $30 marijuana product would face about $3.23 under the new statewide marijuana tax, in addition to approximately $1.91 in state sales tax and 90 cents in municipal tax, bringing the total to roughly $36.04.
The change means the statewide marijuana tax will no longer increase as a product’s THC content rises. Under the existing system, two similarly priced products can carry substantially different tax amounts depending on their potency and product category.
Medical marijuana sales remain exempt from the statewide marijuana tax.
The law also changes how revenue from the tax is distributed. For the 2027 and 2028 fiscal years, 70% of statewide marijuana tax revenue will go to Connecticut’s Social Equity and Innovation Account, up from 65%. The share directed to the state’s General Fund will fall from 10% to 5%. The social equity account supports programs including access to business capital, workforce education, technical assistance and investments in communities disproportionately affected by marijuana prohibition.
Connecticut legalized recreational marijuana in 2021, with adults 21 and older allowed to legally possess marijuana beginning July 1 of that year. The state’s first licensed recreational marijuana stores opened on January 10, 2023.