Connecticut Simplifies Cannabis Taxation: THC Potency Tax Replaced with Flat 10.75% Excise

Effective October 1, 2026, Connecticut has replaced its multi-tiered, potency-based cannabis excise tax with a single flat rate of 10.75% of gross receipts on all adult-use cannabis retail sales. Under the prior structure, retailers calculated tax on a per-milligram-of-THC basis across three product categories—flower, edibles, and all other products. The new law collapses all three into one percentage-of-sale calculation, regardless of product type.

The new 10.75% excise is imposed on top of the existing 3% municipal cannabis tax and the 6.35% state sales and use tax—bringing the combined burden on adult-use sales to roughly 20.10%. Medical cannabis sales, delivery-service sales, and licensee-to-licensee transfers remain exempt. The separate $1/container excise on infused beverages also remains in place.Businesses should evaluate whether the 10.75% rate results in a higher or lower effective tax burden compared to the prior potency-based rates for their particular product mix. High-THC products that previously generated significant per-milligram tax liability may see a relative decrease, while lower-potency products could see a relative increase.

The new tax structure applies to sales occurring on or after October 1, 2026. Retailers should update point-of-sale systems to calculate tax as a straight percentage of gross receipts rather than performing per-milligram THC calculations. Returns filed for sales periods beginning October 1 should reflect the new methodology.

The shift to a gross-receipts-based tax was a major industry priority last session for operational simplification and competitive advantage. Retailers no longer need to calculate tax on a per-milligram-of-THC basis across multiple product categories. This should reduce compliance costs and the risk of calculation errors. In addition, the change closely aligns Connecticut’s cannabis tax framework with that of Massachusetts.