Section 425.100  Nature of the Tax

 

a)         The corporate authorities of any municipality may, by ordinance, impose a tax upon all persons engaged in the business of selling cannabis, other than cannabis purchased under the Compassionate Use of Medical Cannabis Program Act [410 ILCS 130], at retail in the municipality.  The Tax is imposed on the cannabis retailer.

 

b)         Persons subject to any Tax imposed under the Law may reimburse themselves for their seller's tax liability under the Law by separately stating the Tax as an additional charge.  That charge may be stated in combination (in a single amount) with any State or local tax administered by the Department that sellers are required to collect.

 

c)         The Tax imposed under the Law and all civil penalties that may be assessed as an incident of the Tax shall be collected and enforced by the Department of Revenue.  [65 ILCS 5/8-11-23]

 

Section 425.105  Definitions

 

"Act" means the Cannabis Regulation and Tax Act [410 ILCS 705].

 

"Cannabis" means

 

marijuana, hashish, and other substances that are identified as including any parts of the plant Cannabis sativa and including derivatives or subspecies, such as indica, of all strains of cannabis, whether growing or not;

 

the seeds of the plant;

 

the resin extracted from any part of the plant;

 

any compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin, including tetrahydrocannabinol (THC) and all other naturally produced cannabinol derivatives, whether produced directly or indirectly by extraction; and

 

cannabis flower, concentrate, and cannabis-infused products.

 

"Cannabis" does not include:

 

the mature stalks of the plant;

 

fiber produced from the stalks;

 

oil or cake made from the seeds of the plant;

 

any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted from it), fiber, oil or cake;

 

the sterilized seed of the plant that is incapable of germination;

 

industrial hemp as defined and authorized under the Industrial Hemp Act [505 ILCS 5]; or

 

cannabis that is subject to tax under the Compassionate Use of Medical Cannabis Program Act.  [410 ILCS 705/1-10]

 

"Cannabis business establishment" means a cultivation center, craft grower, processing organization, infuser organization, dispensing organization, or transporting organization licensed under the Cannabis Regulation and Tax Act.  [410 ILCS 705/1-10]

 

"Cannabis concentrate" means a product derived:

 

from cannabis that is produced by extracting cannabinoids, including tetrahydrocannabinol (THC), from the plant through the use of:

 

propylene glycol, glycerin, butter, olive oil or other typical cooking fats;

 

water, ice, or dry ice; or

 

butane, propane, CO₂, ethanol, or isopropanol; and

 

with the intended use of smoking or making a cannabis-infused product.  [410 ILCS 705/1-10]

 

"Cannabis flower" means marijuana, hashish, and other substances that are identified as including any parts of the plant Cannabis sativa and including:

 

derivatives or subspecies, such as indica, of all strains of cannabis; and

 

raw kief, leaves, and buds, but not:

 

resin that has been extracted from any part of the plant; nor

 

any compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin.  [410 ILCS 705/1-10]

 

"Cannabis-infused product" means beverage, food, oils, ointments, tincture, topical formulation, or another product containing cannabis that is not intended to be smoked.  [410 ILCS 705/65-5]

 

"Cannabis retailer" means a dispensing organization licensed under the Cannabis Regulation and Tax Act that sells cannabis for use and not for resale.  [410 ILCS 705/65-1]

 

"Department" means the Department of Revenue.

 

"Gross receipts" from the sales of cannabis by a cannabis retailer means the total selling price or the amount of such sales.  In the case of charges and time sales, the amount thereof shall be included only when payments are received by the cannabis retailer.

 

"Law" means the Municipal Cannabis Retailers' Occupation Tax Law [65 ILCS 5/8-11-23].

 

"Municipal Cannabis Retailers' Occupation Tax" or "Tax" means the Tax imposed by the Law.

 

"Person" means:

 

a natural individual, firm, partnership, association, joint stock company, joint adventure, public or private corporation, limited liability company; or

 

a receiver, executor, trustee, guardian, or other representative appointed by order of any court.

 

"Purchaser" means a person who acquires cannabis for a valuable consideration.

 

"Selling price" or "Amount of sale" means the consideration for a sale valued in money, whether received in money or otherwise, including cash, credits, property, and services, and shall be determined without any deduction on account of the cost of the property sold, the cost of materials used, labor or service cost, or any other expense whatsoever, but does not include separately stated charges identified on the invoice by cannabis retailers to reimburse themselves for their Tax liability under the Law.  However, "selling price" does not include consideration paid for:

 

any charge for a payment that is not honored by a financial institution;

 

any finance or credit charge, penalty or charge for delayed payment, or discount for prompt payment; and

 

any amounts added to a purchaser's bill because of charges made under the Municipal Cannabis Retailers' Occupation Tax Law, the Cannabis Purchaser Excise Tax Law [410 ILCS 705/Art.65], the County Cannabis Retailers' Occupation Tax Law [55 ILCS 5/5-1006.8], the Use Tax Act [35 ILCS 105], the Service Use Tax Act [35 ILCS 110], or any locally imposed occupation tax.

 

"Taxpayer" means a cannabis retailer who is required to remit the Tax imposed under the Law. 

 

Section 425.110  Tax Imposed

 

a)         The corporate authorities of any municipality may, by ordinance, impose a Tax upon all persons engaged in the business of selling cannabis, other than cannabis purchased under the Compassionate Use of Medical Cannabis Program Act, at retail in the municipality on the gross receipts of the sales made in the course of business.  If imposed, the Tax shall be imposed only in 0.25% increments.  The Tax rate may not exceed 3% of the gross receipts of sales made in a municipality.  [65 ILCS 5/8-11-23(a)]

 

b)         The sale of any product that contains any amount of cannabis or any derivative of cannabis is subject to the Tax under subsection (a) on the full selling price of the product.

 

c)         The Tax is not imposed with respect to any transaction in interstate commerce, to the extent the transaction may not, under the Constitution and statutes of the United States, be made the subject of taxation by this State.

 

d)         The Tax is in addition to all other occupation, privilege, or excise taxes imposed by the State of Illinois or by any municipal corporation or political subdivision thereof.

 

Section 425.115  Bundling of Taxable and Nontaxable Items; Prohibition; Taxation

 

a)         Section 15-70(n)(17) of the Act prohibits dispensing organizations from selling cannabis, cannabis-infused products, and concentrates in combination or bundled with each other or any other items for one price.  If a cannabis retailer sells cannabis, concentrate, or cannabis-infused products in combination or bundled with items that are not subject to Tax under the Law for one price in violation of the prohibition on this activity in Section 15-70 of the Act, then the Tax is imposed on the selling price of the entire bundled product.

 

EXAMPLE:  A cannabis retailer makes gift baskets that contain a ¼ ounce of cannabis that normally sells for $60, a pipe that normally sells for $20, 4 cannabis-infused pods that normally sell for $40, and an electronic device the pods can be used with that normally sells for $45.  The cannabis retailer offers the basket for $135.  The Tax is imposed on the selling price of $135.

 

b)         Each item of cannabis, concentrate and cannabis-infused product must be separately identified by quantity and price on the receipt.  [410 ILCS 705/15-70(n)(17)]

 

Section 425.120  Registration of Cannabis Retailers

 

a)         It shall be unlawful for any cannabis retailer to engage in the business of selling cannabis at retail in this State without a certificate of registration from the Department.

 

b)         Every person subject to the Tax under the Law shall apply to the Department (on a form prescribed and furnished by the Department) for a certificate of registration under the Law.  Application for a certificate of registration shall be made to the Department on forms furnished by the Department.

 

c)         The certificate of registration that is issued by the Department to a retailer under the Retailers' Occupation Tax Act [35 ILCS 120] shall permit a person to engage in the business of selling cannabis under the Law without registering separately with the Department.  If a retailer holding a certificate of registration under the Retailers' Occupation Tax Act engages in the business of selling cannabis at another location in this State, the Department shall furnish him or her with a sub-certificate of registration for that place of business, and the applicant shall display the appropriate sub-certificate of registration at that place of business.  The sub-certificate of registration shall bear the same registration number as that appearing upon the certificate of registration to which the sub-certificate relates. [35 ILCS 120/2a]  A certificate of registration or sub-certificate of registration issued under the Retailers' Occupation Tax Act waives the registration requirements under this Section.  However, the Department may require the retailer to provide such other information as the Department may reasonably require for it to administer and enforce the provisions of the Law.  A retailer may not engage in the business of selling cannabis until he or she is issued a certificate of registration.

 

Section 425.125  Revocation of Certificate of Registration

 

a)         The revocation of a cannabis retailer's certificate of registration under the Retailers' Occupation Tax Act revokes a cannabis retailer's certificate of registration under the Law.

 

b)         The Department shall notify the Department of Financial and Professional Regulation upon revocation of a certificate of registration issued to a cannabis retailer.

 

Section 425.130  Return and Payment of Tax by Cannabis Retailers

 

a)         Retailers shall file all cannabis Tax returns and shall make all cannabis Tax payments by electronic means in the manner and form required by the Department.  [35 ILCS 120/3]

 

b)         The information required for the Tax shall be furnished on the cannabis retailer's State cannabis dispensary Tax return.

 

c)         If the cannabis retailer files its Illinois Retailers' Occupation Tax returns on the gross receipts basis, it must report Municipal Cannabis Retailers' Occupation Tax information in its returns on the same basis.  If the cannabis retailer files its Illinois Retailers' Occupation Tax returns on the gross sales basis, it must report Municipal Cannabis Retailers' Occupation Tax information in its returns on the gross sales basis.

 

Section 425.135  Books and Records

 

a)         Every cannabis retailer shall keep books and records of all sales of cannabis, together with invoices, bills of lading, sales records, copies of bills of sale, inventories prepared as of December 31 of each year, or otherwise annually as has been the custom in the specific trade, and other pertinent papers and documents.  For purposes of this Section, "records" means all data maintained by the cannabis retailer, including data on paper, microfilm, microfiche or any type of machine-sensible data compilation.

 

b)         All books and records and other papers and documents that are required by the Law to be kept shall be kept in the English language and shall, at all times during business hours of the day, be subject to inspection by the Department or its duly authorized agents and employees.

 

c)         It shall be presumed that all sales of cannabis are subject to Tax under the Law until the contrary is established, and the burden of proving that a transaction is not taxable under this Part shall be upon the cannabis retailer.

 

d)         Penalties

 

1)         Except for the books and records identified in subsection (e), any cannabis retailer who fails to keep books and records, or fails to produce books and records for examination as required by this Section, is liable to pay to the Department, for deposit into the Tax Compliance and Administration Fund, a penalty of:

 

A)        $1,000 for the first failure to keep books and records or produce books and records for examination; and

 

B)        $3,000 for each subsequent failure to keep books and records or produce books and records for examination.

 

2)         The penalties imposed under this subsection (d) shall not apply if the taxpayer shows that it acted with ordinary business care and prudence.

 

e)         All books and records kept by a cannabis retailer, pursuant to rules adopted by the Department of Financial and Professional Regulation to implement the Act, shall, at all times during business hours of the day, be subject to inspection by the Department or its duly authorized agents and employees.  The Department shall also have access to the cannabis retailer's automated data processing and/or point of sale system.

 

Section 425.140  Claims and Credit Memoranda

 

Cannabis retailers may file claims for credit or refund of Taxes in accordance with the procedures, limitations, and restrictions contained in Sections 6, 6a, 6b, 6c, and 6d of the Retailers' Occupation Tax Act.

 

Section 425.145.  Penalties and Interest; Procedures

 

a)         All penalties (both civil and criminal), provisions concerning interest and procedures (such as the making of assessments, the venue and mode of conducting hearings, subpoenas, matters pertaining to judicial review and other procedural subjects), together with statutes of limitation, are the same under the Law as under the Illinois Retailers' Occupation Tax Act.

 

b)         All provisions of the Uniform Penalty and Interest Act [35 ILCS 735] that are not inconsistent with the Law shall apply.

 

Section 425.150  Ordinances and Resolutions Imposing or Discontinuing a Tax

 

a)         An ordinance or resolution imposing or discontinuing a Tax under the Law or effecting a change in the rate of the Tax that is adopted on or after June 25, 2019 (the effective date of Public Act 101-27), and for which a certified copy is filed with the Department on or before April 1, 2020, shall be administered and enforced by the Department beginning on July 1, 2020. 

 

b)         For ordinances filed with the Department after April 1, 2020, an ordinance or resolution imposing or discontinuing the Tax or effecting a change in the rate of the Tax shall either:

 

1)         be adopted, with a certified copy of the ordinance filed with the Department, on or before the first day of April. After the filing, the Department will proceed to administer and enforce the Law as of the first day of July next following the adoption and filing; or

 

2)         be adopted, with a certified copy of the ordinance filed with the Department on or before the first day of October. After the filing, the Department will proceed to administer and enforce the Law as of the first day of January next following the adoption and filing.  [65 ILCS 5/8-11-23(f)]

 

Section 425.155  Administration and Enforcement

 

a)         The Department shall have full power to:

 

1)         administer and enforce the Law;

 

2)         collect all Taxes and penalties due under the Law;

 

3)         submit to the State Treasurer, for deposit in the Local Cannabis Retailers' Occupation Tax Trust Fund, all Taxes and penalties collected under the Law, excluding those described in Section 425.135(d); and

 

4)         determine all rights to credit memoranda arising on account of the erroneous payment of Tax or penalty under the Law.

 

b)         In the administration of and compliance with the Law, the Department and persons who are subject to the Law shall have the same rights, remedies, privileges, immunities, powers and duties, and be subject to the same conditions, restrictions, limitations, penalties, and definitions of terms, and employ the same modes of procedure, as are described in Sections 1, 1a, 1d, 1e, 1f, 1i, 1j, 1k, 1m, 1n, 2 through 2-65 (in respect to all provisions therein other than the State rate of tax), 2a, 2b, 2c, 2i, 3 (except as to the disposition of taxes and penalties collected), 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5h, 5i, 5j, 5k, 5l, 6, 6a, 6b, 6c, 6d, 7, 8, 9, 10, 11, 11a, 12, and 13 of the Retailers' Occupation Tax Act and Section 3-7 of the Uniform Penalty and Interest Act as fully as if those provisions were set forth in the Law.  [65 ILCS 5/8-11-23]

 

c)         To avoid needless repetition, the substance and provisions of all Retailers' Occupation Tax Regulations (86 Ill. Adm. Code 130) that are not incompatible with the Law will apply in implementation of the Law.