Last verified: May 2026
Three-Layer Tax Structure
| Tax | Rate | Where it applies |
|---|---|---|
| State sales tax | 6.5% | At retail (dispensary–to–patient) |
| Privilege tax (wholesale) | 4% | Cultivator–to–dispensary transfer |
| Privilege tax (retail) | 4% | Dispensary–to–patient retail |
| Local sales tax | ~1%–5% | City- and county-dependent |
| Effective patient burden | ~11.5%–15.5% | Combined retail tax at point-of-sale |
Source: Arkansas Department of Finance and Administration. The 4% privilege tax is structurally unusual — it hits both the wholesale transfer and the retail transaction, effectively a stacked excise. As of 2025 a single year of cannabis tax revenue ($32.3M) materially funds Arkansas’s universal free school-breakfast program (see SB 59).
How the 4% Privilege Tax Works
The Arkansas medical-cannabis privilege tax under Ark. Code § 26-57-1503 is structurally unusual: it applies both at the wholesale transfer (cultivator selling to dispensary) and at the retail transaction (dispensary selling to patient). Most state medical-cannabis programs impose either a wholesale excise tax or a retail privilege tax, but not both.
The practical effect is that the 4% privilege tax compounds:
- Cultivator wholesale price = $1,000.
- + 4% privilege tax = $40 to DFA.
- Dispensary acquisition cost = $1,040.
- Dispensary sells to patient at, say, $1,800 retail.
- + 4% privilege tax on $1,800 = $72 to DFA.
- + 6.5% state sales tax on $1,800 = $117 to DFA.
- + ~3% local taxes = $54 to local.
- Total at-register cost to patient: $2,043, of which $283 is taxes (~16%).
2025 Tax Revenue: $32.3 Million
The Arkansas Department of Finance and Administration reports that the medical-cannabis program generated $32.3 million in state tax revenue in 2025 (calendar year). Since the program’s launch in May 2019, cumulative state tax revenue has surpassed $218.32 million.
Where the Tax Revenue Goes (Post-SB 59)
From 2017 through 2024, most medical-marijuana tax revenue (roughly $90 million cumulatively) flowed to the University of Arkansas for Medical Sciences (UAMS) National Cancer Institute Designation Trust Fund to support UAMS’s Winthrop P. Rockefeller Cancer Institute pursuit of NCI designation.
SB 59 of 2025 (Act 122), signed by Governor Sanders on February 20, 2025, restructured the flow. Under the new statute, medical-marijuana tax revenue, after covering ~$3–5 million in annual program-administration costs, flows into a Food Insecurity Fund prioritized for: (1) the state’s Summer EBT program, (2) free-and-reduced-price meal copayments, and (3) the new universal free school breakfast program, beginning in the 2025–26 school year. Full coverage on the SB 59 page.
Local Tax Variation
Local sales taxes on Arkansas medical cannabis vary by city and county. Examples (2026):
- Little Rock (Pulaski County): 1.0% city + 1.0% county = 2.0% local.
- Hot Springs (Garland County): 1.5% city + 0.5% county = 2.0% local.
- Fayetteville (Washington County): 2.0% city + 1.25% county = 3.25% local.
- Bentonville (Benton County): 2.0% city + 1.0% county = 3.0% local.
- Fort Smith (Sebastian County): 2.0% city + 1.25% county = 3.25% local.
- Pine Bluff (Jefferson County): 1.5% city + 1.25% county = 2.75% local.
Comparative Tax Burden
- Arkansas medical: 11.5%–15.5% total at retail (after 6.5% state + 4% privilege + ~1–5% local).
- Mississippi medical: ~12.5% at retail (5% excise on first sale + 7% state sales tax + small local).
- Oklahoma medical: ~9% at retail (7% state excise + ~2% local).
- Missouri rec (cross-border): ~14–20% at retail (6% state excise + 4.225% state sales + up to 8% local).
- Louisiana medical (pharmacy-only): ~9.45% (4.45% state sales + ~5% local).
Arkansas is mid-pack regionally on tax burden — not the cheapest medical program in the South, not the most expensive, but the structural double-stacking of the privilege tax on both wholesale and retail is a notable feature.
Patient Practical Guidance
- Most Arkansas dispensaries display tax-inclusive shelf prices (the cap is total at register).
- Dispensary loyalty programs and senior, veteran, and patient-of-record discounts can reduce effective at-register tax burden by 5–15%.
- Cash transactions are common because most dispensaries cannot reliably accept credit/debit cards (federal banking restrictions). PIN-based debit (cashless ATM) is common.
For in-depth cannabis education, dosing guides, safety information, and research summaries, visit our partner site TryCannabis.org
Related on this site: Arkansas Edible THC Cap, Arkansas Home Grow Rules, Arkansas Best Edibles.