Illinois Medical Cannabis Cultivation Privilege Tax Return -N-05/15)

Medical Cannabis Cultivation Privilege Tax Return -N-05/15)
Form MC-1 Instructions
Form MC-1 General Information
What is the medical cannabis cultivation
privilege tax?
“Medical cannabis cultivation privilege tax” is a tax that you
(a medical cannabis cultivator) must remit for the medical
cannabis sold.

Who must file Form MC-1?
You must file Form MC-1, Medical Cannabis Cultivation
Privilege Tax Return, if you are a medical cannabis cultivation
center. Do not file form MC-1 to report Adult Use Cannabis
Cultivation Privilege Tax sold. These sales must be reported
on Form CC-1, Adult Use Cannabis Cultivation Privilege Tax
Return.
You must attach Schedule MC-2, Medical Cannabis Sales, to
your MC-1 return to identify each cultivation center from which
you made sales of medical cannabis during the reporting
period.
Note: Medical cannabis dispensing organizations must report
sales of medical cannabis on Form CD-1, Cannabis Dispensary
Tax Return. Dispensaries that only sell medical cannabis will
skip Step 2 when completing Form CD-1. Form ST-1, Sales and
Use Tax and E911 Surcharge Return is still required to report
sales of non-cannabis products. Receipts from cannabis sales
should be taken as a deduction on Schedule A of Form ST-1.

Who must file Schedule MC-2?
If you have one business, but sell medical cannabis from more
than one cultivation center, you must complete Schedule MC-2
to report sales from each cultivation center. You will need to
complete Schedule MC-2 before completing Form MC-1. See
Schedule MC-2 instructions.

What sales are subject to the medical
cannabis cultivation privilege tax?
Tax is due on medical cannabis sold by a cultivation center.
Medical cannabis includes both bulk medical cannabis and
medical cannabis infused products.
Bulk medical cannabis is dried cannabis
•	 in its physical form to smoke;
•	 in its physical form to vaporize; and
•	 not infused or combined with another product for​
medicinal use.
Medical cannabis infused product is a product containing
cannabis or a cannabis concentrate, including
•	 capsules;
•	 food and beverage products prepared for consumption;
•	 cooking oils;
•	 tinctures or tonics, such as sprays or drops;
•	 topicals, such as ointments, balms, oils, lotions, gels, or
patches;
•	 bath salts or oils;
MC-1-Instructions (R-09/20)

•	 aromatherapy sprays or essences;
•	 concentrates, extractions, oils, or wax for use with a
vaporizer; and
•	 hash and concentrates, including ice wax, bubble hash, oil,
wax, budder, pie crust, taffy, shatter, nectar, caviar, and kief.
See 86 Illinois Administrative Code Part 429 for more
information about medical cannabis products.

How do I calculate the medical cannabis
cultivation privilege tax?
Tax is calculated at a rate of 7 percent (.07) of the sales price
per ounce of medical cannabis.
Tax on a package of medical cannabis is based on the total
weight in ounces of medical cannabis as shown on the label
required by 8 Illinois Administrative Code Section 1000.420.
The sales price is determined without any deduction on account
of the cost of property sold, the cost of materials used, labor or
service cost, or any other expense whatsoever. See 86 Illinois
Administrative Code Section 429.110 for rules regarding the
treatment of transportation and delivery charges.
The tax is computed on the sales price of the medical cannabis
sold after the application of any applicable discounts.
There is no cultivation privilege tax on free samples of medical
cannabis given to a dispensing organization by a cultivation
center. However, a cultivation center will incur Use Tax liability
on the cost price of any free samples of medical cannabis given
to dispensing organizations. See 86 Illinois Administrative Code
Section 150.305(c).

When must I file Form MC-1?
You must file this return, along with any payment you owe, on
or before the 20th day of the month following the end of the
reporting period.
Note: If the due date falls on a weekend or holiday, your return
and payment are due the next business day.

How can I file and pay electronically?
Illinois law requires Form MC-1 to be filed electronically and
the tax to be paid electronically. You must use MyTax Illinois
at mytax.illinois.gov to file your Form MC-1 and pay any tax
due. To request a waiver of the electronic payment mandate,
complete Form IL-900-EW, Electronic Waiver Request, which
is available from the Illinois Department of Revenue by request
at 217 782-6045 or by email at [email protected]. If
granted and unless renewed, this waiver shall not exceed two
years.

How do I make a payment?
Payments must be made electronically through one of the
following options:
•	 Easily make your payment online through MyTax Illinois
at mytax.illinois.gov. Electronic payments can be made
through MyTax Illinois. For your initial payment through
MyTax Illinois, you must set up your account and follow
the instructions provided.
•	 Submit your payment through ACH credit (payments
authorized through your financial institution). If you wish
to set up or make changes to this option, you must first
contact IDOR’s Electronic Funds Transfer Division at
217 782-6257 for additional information.
Note: Businesses that cannot pay electronically are required
to make cash payments. Additional instructions for submitting
cash payments to IDOR will be provided upon request.

What if I fail to file or pay the amount I
owe?
You owe a late-filing penalty if you do not file a processable
return by the due date, a late-payment penalty if you do not
pay the amount you owe by the original due date of the return,
a bad check penalty if your remittance is not honored by your
financial institution, and a cost of collection fee if you do not
pay the amount you owe within 30 days of the date printed on
a bill. Interest is calculated on tax from the day after the original
due date of your return through the date you pay the tax. We
will bill you for penalty and interest. For more information, see
Publication 103, Penalty and Interest for Illinois Taxes, which is
available on our website at tax.illinois.gov.

What if I need help?
Visit our website at tax.illinois.gov, or call us weekdays
between 8:00 a.m. and 4:00 p.m. at 217 782-6045 or email us
at: [email protected].

MC-1-Instructions (R-09/20)

Specific Instructions
When completing this form, please round to the nearest dollar
by dropping amounts of less than 50 cents and i­ncreasing
amounts of 50 cents or more to the next dollar.
For multiple site businesses, you must use Schedule MC-2,
Medical Cannabis Sales, to report sales from each cultivation
center. You will need to complete Schedule MC-2 before
completing Form MC-1. See Schedule MC-2 instructions.
Submit Schedule MC-2 when you file form MC-1

Line 5a - Enter the sum of the consideration received for
ounces infused into products.
Line 5b - Enter the sum of deductible consideration for ounces
infused into products. This amount cannot exceed the amount
you entered on Line 5a.
Line 5 - Subtract Line 5b from Line 5a. This is your net
consideration received for ounces infused into products from
Schedule MC-2.

Step 1: Figure the total number of ounces
sold

Line 6 - Add Lines 4 and 5. This is your total consideration
received subject to tax.

Line 1a - Enter the sum of the number of bulk ounces sold from
each cultivation center from Schedule MC-2. (Enter ounces to
three decimal places.)

Line 7 - Multiply Line 6 by the tax rate. This is your privilege tax
due.

Line 1b - Enter the sum of the number of deductible bulk
ounces. This amount cannot exceed the amount you entered on
Line 1a. (Enter ounces to three decimal places.) A reason for
the deduction is required.
Line 1 - Subtract Line 1b from Line 1a. This is your net bulk
ounces sold.
Line 2a - Enter the sum of the number of ounces infused into
products sold from each cultivation center from Schedule MC-2.
(Enter ounces to three decimal places.)
Line 2b - Enter the sum of the number of deductible ounces
infused into products. This amount cannot exceed the amount
you entered on Line 2a. (Enter ounces to three decimal places.)
A reason for the deduction is required.
Line 2 - Subtract Line 2b from Line 2a. This is your net ounces
infused into products sold from each cultivation center.
Line 3 - Add Lines 1 and 2. This is your total ounces sold from
each cultivation center subject to tax.

Step 2: Figure your privilege tax due
Line 4a - Enter the sum of the consideration received for bulk
ounces.
Line 4b - Enter the sum of deductible consideration for bulk
ounces. This amount cannot exceed the amount you entered on
Line 4a.
Line 4 - Subtract Line 4b from Line 4a. This is your net
consideration received for bulk ounces from Schedule MC-2.

Printed by authority of the state of Illinois Web only - One copy MC-1-Instructions (R-09/20)

Line 8 - If you file your return and pay the amount due by the
due date, you are entitled to a discount. Enter the lesser of the
product of Line 7 multiplied by 1.75 percent (.0175) or $1,000,
only if you file your return and pay the amount due by the due
date. Otherwise, enter ‘0.’
Note: The discount is only valid for electronically filed returns
and electronic payments, unless a payment waiver is in place.
Line 9 - Subtract Line 8 from Line 7. This is your net tax due.
Line 10 - Enter the sum of all quarter-monthly (accelerated)
payments that were made for the filing period
Line 11 - Subtract Line 10 from Line 9. This is your tax due
after quarter-monthly (accelerated) payments.
Line 12 - If you have a credit memorandum or prior
overpayment and you wish to use it toward what you owe, enter
the amount you are using.
Line 13 - Subtract Line 12 from Line 11. This is your payment
due. We will bill you for any penalty and interest amounts owed.
See Publication 103, Penalties and Interest for Illinois Taxes, for
more information.