The Tax Rates of CBD
As more and more states legalize the use of CBD, a question that many people have is how this popular supplement is taxed in the United States. The answer to this question is not straightforward, as it depends on a variety of factors, including the state in which the CBD is purchased and the type of CBD product being purchased.
In general, the tax treatment of CBD in the United States is determined by the classification of the product as either hemp-derived or marijuana-derived. Hemp-derived CBD is legal under federal law and is not subject to the same taxes as marijuana-derived CBD, which is still illegal under federal law.
Hemp-derived CBD products are typically classified as dietary supplements, which means that they are subject to the same taxes as other dietary supplements. This means that they are generally taxed at the state and local level, but not at the federal level. In some states, dietary supplements are exempt from sales tax, while in others they are subject to the same sales tax rate as other goods and services.
Marijuana-derived CBD, on the other hand, is treated differently from hemp-derived CBD. Because marijuana is illegal under federal law, marijuana-derived CBD products are subject to federal taxes. This means that they are typically subject to both state and federal taxes, although the exact tax rates can vary depending on the state in which the product is purchased.
In addition to sales taxes, CBD products may also be subject to excise taxes. An excise tax is a tax on the production or sale of a specific good or service, and it is typically used to regulate certain industries or products. In the case of CBD, some states have implemented excise taxes on the sale of CBD products in order to generate revenue and regulate the industry.
The tax treatment of CBD can be complex and can vary depending on the state in which the product is purchased and the type of product being purchased. In general, however, hemp-derived CBD products are treated like dietary supplements and are subject to state and local taxes, while marijuana-derived CBD products are subject to both state and federal taxes. It is important to understand the tax implications of purchasing CBD in order to make informed decisions about whether or not to use these products.