104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB1228

 

Introduced 1/28/2025, by Rep. Sonya M. Harper

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 120/2-10
410 ILCS 705/65-10

    Amends the Retailers' Occupation Tax Act. In a provision concerning the rate of tax, provides that the definition "prescription and nonprescription medicine and drugs" includes cannabis or cannabis-infused products purchased from a dispensing organization under the Cannabis Regulation and Tax Act by a cardholder under the Compassionate Use of Medical Cannabis Act. Amends the Cannabis Regulation and Tax Act. Provides that the tax imposed under the provisions is not imposed on cannabis-infused product that is subject to tax under the Compassionate Use of Medical Cannabis Program Act or cannabis or cannabis-infused product sold to a cardholder under the Compassionate Use of Medical Cannabis Program Act. Effective January 1, 2027.


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A BILL FOR

 

HB1228LRB104 05834 BDA 15865 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Retailers' Occupation Tax Act is amended by
5changing Section 2-10 as follows:
 
6    (35 ILCS 120/2-10)
7    Sec. 2-10. Rate of tax. Unless otherwise provided in this
8Section, the tax imposed by this Act is at the rate of 6.25% of
9gross receipts from sales, which, on and after January 1,
102025, includes leases, of tangible personal property made in
11the course of business.
12    Beginning on July 1, 2000 and through December 31, 2000,
13with respect to motor fuel, as defined in Section 1.1 of the
14Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
15the Use Tax Act, the tax is imposed at the rate of 1.25%.
16    Beginning on August 6, 2010 through August 15, 2010, and
17beginning again on August 5, 2022 through August 14, 2022,
18with respect to sales tax holiday items as defined in Section
192-8 of this Act, the tax is imposed at the rate of 1.25%.
20    Within 14 days after July 1, 2000 (the effective date of
21Public Act 91-872), each retailer of motor fuel and gasohol
22shall cause the following notice to be posted in a prominently
23visible place on each retail dispensing device that is used to

 

 

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1dispense motor fuel or gasohol in the State of Illinois: "As of
2July 1, 2000, the State of Illinois has eliminated the State's
3share of sales tax on motor fuel and gasohol through December
431, 2000. The price on this pump should reflect the
5elimination of the tax." The notice shall be printed in bold
6print on a sign that is no smaller than 4 inches by 8 inches.
7The sign shall be clearly visible to customers. Any retailer
8who fails to post or maintain a required sign through December
931, 2000 is guilty of a petty offense for which the fine shall
10be $500 per day per each retail premises where a violation
11occurs.
12    With respect to gasohol, as defined in the Use Tax Act, the
13tax imposed by this Act applies to (i) 70% of the proceeds of
14sales made on or after January 1, 1990, and before July 1,
152003, (ii) 80% of the proceeds of sales made on or after July
161, 2003 and on or before July 1, 2017, (iii) 100% of the
17proceeds of sales made after July 1, 2017 and prior to January
181, 2024, (iv) 90% of the proceeds of sales made on or after
19January 1, 2024 and on or before December 31, 2028, and (v)
20100% of the proceeds of sales made after December 31, 2028. If,
21at any time, however, the tax under this Act on sales of
22gasohol, as defined in the Use Tax Act, is imposed at the rate
23of 1.25%, then the tax imposed by this Act applies to 100% of
24the proceeds of sales of gasohol made during that time.
25    With respect to mid-range ethanol blends, as defined in
26Section 3-44.3 of the Use Tax Act, the tax imposed by this Act

 

 

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1applies to (i) 80% of the proceeds of sales made on or after
2January 1, 2024 and on or before December 31, 2028 and (ii)
3100% of the proceeds of sales made after December 31, 2028. If,
4at any time, however, the tax under this Act on sales of
5mid-range ethanol blends is imposed at the rate of 1.25%, then
6the tax imposed by this Act applies to 100% of the proceeds of
7sales of mid-range ethanol blends made during that time.
8    With respect to majority blended ethanol fuel, as defined
9in the Use Tax Act, the tax imposed by this Act does not apply
10to the proceeds of sales made on or after July 1, 2003 and on
11or before December 31, 2028 but applies to 100% of the proceeds
12of sales made thereafter.
13    With respect to biodiesel blends, as defined in the Use
14Tax Act, with no less than 1% and no more than 10% biodiesel,
15the tax imposed by this Act applies to (i) 80% of the proceeds
16of sales made on or after July 1, 2003 and on or before
17December 31, 2018 and (ii) 100% of the proceeds of sales made
18after December 31, 2018 and before January 1, 2024. On and
19after January 1, 2024 and on or before December 31, 2030, the
20taxation of biodiesel, renewable diesel, and biodiesel blends
21shall be as provided in Section 3-5.1 of the Use Tax Act. If,
22at any time, however, the tax under this Act on sales of
23biodiesel blends, as defined in the Use Tax Act, with no less
24than 1% and no more than 10% biodiesel is imposed at the rate
25of 1.25%, then the tax imposed by this Act applies to 100% of
26the proceeds of sales of biodiesel blends with no less than 1%

 

 

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1and no more than 10% biodiesel made during that time.
2    With respect to biodiesel, as defined in the Use Tax Act,
3and biodiesel blends, as defined in the Use Tax Act, with more
4than 10% but no more than 99% biodiesel, the tax imposed by
5this Act does not apply to the proceeds of sales made on or
6after July 1, 2003 and on or before December 31, 2023. On and
7after January 1, 2024 and on or before December 31, 2030, the
8taxation of biodiesel, renewable diesel, and biodiesel blends
9shall be as provided in Section 3-5.1 of the Use Tax Act.
10    Until July 1, 2022 and from July 1, 2023 through December
1131, 2025, with respect to food for human consumption that is to
12be consumed off the premises where it is sold (other than
13alcoholic beverages, food consisting of or infused with adult
14use cannabis, soft drinks, and food that has been prepared for
15immediate consumption), the tax is imposed at the rate of 1%.
16Beginning July 1, 2022 and until July 1, 2023, with respect to
17food for human consumption that is to be consumed off the
18premises where it is sold (other than alcoholic beverages,
19food consisting of or infused with adult use cannabis, soft
20drinks, and food that has been prepared for immediate
21consumption), the tax is imposed at the rate of 0%. On and
22after January 1, 2026, food for human consumption that is to be
23consumed off the premises where it is sold (other than
24alcoholic beverages, food consisting of or infused with adult
25use cannabis, soft drinks, candy, and food that has been
26prepared for immediate consumption) is exempt from the tax

 

 

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1imposed by this Act.
2    With respect to prescription and nonprescription
3medicines, drugs, medical appliances, products classified as
4Class III medical devices by the United States Food and Drug
5Administration that are used for cancer treatment pursuant to
6a prescription, as well as any accessories and components
7related to those devices, modifications to a motor vehicle for
8the purpose of rendering it usable by a person with a
9disability, and insulin, blood sugar testing materials,
10syringes, and needles used by human diabetics, the tax is
11imposed at the rate of 1%. For the purposes of this Section,
12until September 1, 2009: the term "soft drinks" means any
13complete, finished, ready-to-use, non-alcoholic drink, whether
14carbonated or not, including, but not limited to, soda water,
15cola, fruit juice, vegetable juice, carbonated water, and all
16other preparations commonly known as soft drinks of whatever
17kind or description that are contained in any closed or sealed
18bottle, can, carton, or container, regardless of size; but
19"soft drinks" does not include coffee, tea, non-carbonated
20water, infant formula, milk or milk products as defined in the
21Grade A Pasteurized Milk and Milk Products Act, or drinks
22containing 50% or more natural fruit or vegetable juice.
23    Notwithstanding any other provisions of this Act,
24beginning September 1, 2009, "soft drinks" means non-alcoholic
25beverages that contain natural or artificial sweeteners. "Soft
26drinks" does not include beverages that contain milk or milk

 

 

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1products, soy, rice or similar milk substitutes, or greater
2than 50% of vegetable or fruit juice by volume.
3    Until August 1, 2009, and notwithstanding any other
4provisions of this Act, "food for human consumption that is to
5be consumed off the premises where it is sold" includes all
6food sold through a vending machine, except soft drinks and
7food products that are dispensed hot from a vending machine,
8regardless of the location of the vending machine. Beginning
9August 1, 2009, and notwithstanding any other provisions of
10this Act, "food for human consumption that is to be consumed
11off the premises where it is sold" includes all food sold
12through a vending machine, except soft drinks, candy, and food
13products that are dispensed hot from a vending machine,
14regardless of the location of the vending machine.
15    Notwithstanding any other provisions of this Act,
16beginning September 1, 2009, "food for human consumption that
17is to be consumed off the premises where it is sold" does not
18include candy. For purposes of this Section, "candy" means a
19preparation of sugar, honey, or other natural or artificial
20sweeteners in combination with chocolate, fruits, nuts or
21other ingredients or flavorings in the form of bars, drops, or
22pieces. "Candy" does not include any preparation that contains
23flour or requires refrigeration.
24    Notwithstanding any other provisions of this Act,
25beginning September 1, 2009, "nonprescription medicines and
26drugs" does not include grooming and hygiene products. For

 

 

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1purposes of this Section, "grooming and hygiene products"
2includes, but is not limited to, soaps and cleaning solutions,
3shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
4lotions and screens, unless those products are available by
5prescription only, regardless of whether the products meet the
6definition of "over-the-counter-drugs". For the purposes of
7this paragraph, "over-the-counter-drug" means a drug for human
8use that contains a label that identifies the product as a drug
9as required by 21 CFR 201.66. The "over-the-counter-drug"
10label includes:
11        (A) a "Drug Facts" panel; or
12        (B) a statement of the "active ingredient(s)" with a
13    list of those ingredients contained in the compound,
14    substance or preparation.
15    Beginning on January 1, 2014 (the effective date of Public
16Act 98-122), "prescription and nonprescription medicines and
17drugs" includes medical cannabis purchased from a registered
18dispensing organization under the Compassionate Use of Medical
19Cannabis Program Act.
20    Beginning on January 1, 2027, "prescription and
21nonprescription medicine and drugs" includes cannabis or
22cannabis-infused products purchased from a dispensing
23organization under the Cannabis Regulation and Tax Act by a
24cardholder, as defined under Section 10 of the Compassionate
25Use of Medical Cannabis Act.
26    As used in this Section, "adult use cannabis" means

 

 

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1cannabis subject to tax under the Cannabis Cultivation
2Privilege Tax Law and the Cannabis Purchaser Excise Tax Law
3and does not include cannabis or cannabis-infused product sold
4to a cardholder, as defined under Section 10 of the
5Compassionate Use of Medical Cannabis Act subject to tax under
6the Compassionate Use of Medical Cannabis Program Act.
7(Source: P.A. 102-4, eff. 4-27-21; 102-700, Article 20,
8Section 20-20, eff. 4-19-22; 102-700, Article 60, Section
960-30, eff. 4-19-22; 102-700, Article 65, Section 65-10, eff.
104-19-22; 103-9, eff. 6-7-23; 103-154, eff. 6-30-23; 103-592,
11eff. 1-1-25; 103-781, eff. 8-5-24; revised 11-26-24.)
 
12    Section 10. The Cannabis Regulation and Tax Act is amended
13by changing Section 65-10 as follows:
 
14    (410 ILCS 705/65-10)
15    Sec. 65-10. Tax imposed.
16    (a) Beginning January 1, 2020, a tax is imposed upon
17purchasers for the privilege of using cannabis at the
18following rates:
19        (1) Any cannabis, other than a cannabis-infused
20    product, with an adjusted delta-9-tetrahydrocannabinol
21    level at or below 35% shall be taxed at a rate of 10% of
22    the purchase price;
23        (2) Any cannabis, other than a cannabis-infused
24    product, with an adjusted delta-9-tetrahydrocannabinol

 

 

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1    level above 35% shall be taxed at a rate of 25% of the
2    purchase price; and
3        (3) A cannabis-infused product shall be taxed at a
4    rate of 20% of the purchase price.
5    (b) The purchase of any product that contains any amount
6of cannabis or any derivative thereof is subject to the tax
7under subsection (a) of this Section on the full purchase
8price of the product.
9    (c) The tax imposed under this Section is not imposed on
10cannabis or cannabis-infused product that is subject to tax
11under the Compassionate Use of Medical Cannabis Program Act or
12on cannabis or cannabis-infused product sold to a cardholder,
13as defined under Section 10 of the Compassionate Use of
14Medical Cannabis Program Act. The tax imposed by this Section
15is not imposed with respect to any transaction in interstate
16commerce, to the extent the transaction may not, under the
17Constitution and statutes of the United States, be made the
18subject of taxation by this State.
19    (d) The tax imposed under this Article shall be in
20addition to all other occupation, privilege, or excise taxes
21imposed by the State of Illinois or by any municipal
22corporation or political subdivision thereof.
23    (e) The tax imposed under this Article shall not be
24imposed on any purchase by a purchaser if the cannabis
25retailer is prohibited by federal or State Constitution,
26treaty, convention, statute, or court decision from collecting

 

 

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1the tax from the purchaser.
2(Source: P.A. 101-27, eff. 6-25-19; 101-593, eff. 12-4-19.)
 
3    Section 99. Effective date. This Act takes effect January
41, 2027.