Legalizing cannabis for adults has been a wise investment. Since 2014 when sales began in Colorado and Washington, legalization policies have provided states a new revenue stream to bolster budgets and fund important services and programs. Through the first quarter of 2024, states have reported a combined total of more than $20 billion in tax revenue from legal, adult-use cannabis sales. In 2023 alone, legalization states generated more than $4 billion in cannabis tax revenue from adult-use sales, which is the most revenue generated by cannabis sales in a single year. In addition to revenue generated for statewide budgets, cities, and towns have also generated hundreds of thousands of dollars in new revenue from local adult-use cannabis taxes.
Twenty-four states have legalized cannabis possession for adults 21 and older. All but one of them — Virginia — have also legalized, regulated, and taxed cannabis sales. In two legalization states — Delaware and Ohio — sales have not begun yet.
In many states with legal, adult-use cannabis sales, tax revenues are allocated for social services and programs. This includes funding education, school construction, early literacy, public libraries, bullying prevention, behavioral health, alcohol and drug treatment, veterans’ services, conservation, job training, conviction expungement expenses, and reinvestment in communities that have been disproportionately affected by the war on cannabis, among many others.
This document reviews each legalization state’s adult-use cannabis tax structure, population, and year-by-year adult-use cannabis tax revenue. States are listed in chronological order, based on when state-legal cannabis sales began, with the most mature markets first. These figures include cannabis excise taxes and states’ standard sales taxes that are applied to cannabis. They do not include medical cannabis tax revenue, application and licensing fees paid by cannabis businesses, additional income taxes generated by workers in the cannabis industry, or taxes paid to the federal government.
Colorado voters approved an initiative to regulate cannabis for adults in November 2012, and on January 1, 2014, the state became the first with legal adult-use sales. Colorado already had a developed medical cannabis regulatory system, and many businesses were able to transition to having both a medical and an adult-use counter.
Colorado has a significant medical program, with about 1.1% of the population enrolled. As is the case in most states, Colorado’s cannabis taxes do not apply to sales to registered medical cannabis patients. Even though medical sales are largely tax-exempt, registered patient numbers and medical sales have declined since patients have had the option of accessing cannabis over-the-counter. Medical cannabis sales decreased modestly from $199 million in fiscal year 2012 to $185 million in calendar year 2023.[1] While medical cannabis patients are exempt from excise taxes, they often must pay medical cannabis specialists for a certification and a registry fee, and many prefer not to be on a government list.
Colorado has generated over $2.3 billion in adult-use cannabis taxes since 2014. At least $746.7 million of the revenue has been dedicated to improving Colorado’s public school system.[2]
The below chart shows the year-by-year totals for Colorado’s cannabis tax revenue. After years of steady growth in cannabis sales and related tax revenue, Colorado experienced reductions in adult-use cannabis tax revenue in 2022 and 2023 — from $396 million in 2021 and $305 million in 2022 to $256 million in 2023. Contributing factors in the recent decline include lower wholesale prices, an end of COVID-related shut-downs that created a short-term boost in sales, and additional states legalizing, resulting in fewer out-of-state consumers.
The figures do not count local sales tax revenues, which have been significant. The city of Denver, for example, applies its standard local sales tax of 4.81% and an additional 5.5% sales tax on adult-use cannabis and collected an estimated $44.4 million in revenue in 2023.[3]
|
Year |
State Tax Revenue from Adult-Use Cannabis[4] |
|---|---|
|
2014 |
$46,104,922 |
|
2015 |
$104,759,961 |
|
2016 |
$167,157,150 |
|
2017 |
$220,688,951 |
|
2018 |
$243,466,892 |
|
2019 |
$279,155,047 |
|
2020 |
$362,027,103 |
|
2021 |
$396,157,005 |
|
2022 |
$305,034,034 |
|
2023 |
$256,756,467 |
|
2024 (through March) |
$59,737,700 |
|
Total (through 2023) |
$2,381,307,532 |
|
Total (including partial 2024 data) |
$2,441,045,232 |
Washington’s voters also approved an adult-use measure in November 2012, and its first stores opened in July 2014. At the time, the state had an unregulated, arguably illegal, medical cannabis dispensary system, which was separate from the regulated adult-use program. This resulted in a slower ramp-up than in Colorado. Until July 2015, taxes were extremely high — 25% at three points of transfer — making it hard to compete with illegal sales. In 2015, the legislature changed the tax rate to 37% and created a medical endorsement program to which adult-use stores could apply to join.
Washington’s cannabis taxes are among the highest in the nation.[5] Since sales began, the state has generated over $4.1 billion in cannabis excise and sales taxes. In every fiscal year since 2019, state officials reported that revenue from the 37% cannabis retail tax outpaced alcohol tax revenue, despite the fact that many more adults consume alcohol than cannabis.[6] For every $1 billion in revenue collected from the cannabis sales tax, nearly $600 million is funneled into public health initiatives, including a fund that provides health insurance for low-income families.[7]
As was the case with Colorado, Washington saw steady annual growth in cannabis tax revenue until 2022. However, in 2023, Washington state again exceeded the previous year's revenue generated, bringing in $532 million. The below chart shows annual excise and sales tax revenue in Washington state, by year. The below figures do not include local taxes, which totaled an estimated $270 million from July 2014 through 2023.[8]
|
Year |
State Tax Revenue from Adult-Use Cannabis[9] |
|---|---|
|
June – Dec. 2014 |
$22,399,058 |
|
2015 |
$159,451,910 |
|
2016 |
$302,976,832 |
|
2017 |
$397,358,420 |
|
2018 |
$437,169,560 |
|
2019 |
$477,310,790 |
|
2020 |
$614,417,720 |
|
2021 |
$630,863,570 |
|
2022 |
$529,443,420 |
|
2023 |
$532,516,060 |
|
Total |
$4,103,907,340 |
Oregon voters approved an initiative regulating cannabis for adult use in November 2014, and the state’s first adult-use stores opened in October 2016. In addition, the legislature allowed medical cannabis dispensaries to sell a limited amount of cannabis (five grams) to adults from October 2015 until December 31, 2016. Those sales were taxed at 25% beginning January 4, 2016. The state’s medical patients (about 0.4% of Oregon’s population and dropping) can buy cannabis tax-free from adult-use stores.
Since voters enacted Measure 110 in 2021, the bulk of the revenue goes to a new Drug Addiction Treatment and Recovery Services Fund.[10]
Like Colorado, Oregon saw its second annual decrease in cannabis tax revenues in 2023. Tax revenues in 2023 totaled $148 million, the lowest annual revenue since 2019, as the below chart shows.
The below annual tax revenues do not include the 3% sales tax some localities impose. From February 2017 through 2023, the local taxes collected totaled $146 million.[11]
|
Year |
State Tax Revenue from Adult-Use Cannabis[12] |
|---|---|
|
Feb. – Dec. 2016 |
$60,154,432 |
|
2017 |
$68,646,246 |
|
2018 |
$94,226,985 |
|
2019 |
$115,915,277 |
|
2020 |
$158,336,274 |
|
2021 |
$177,773,944 |
|
2022 |
$150,316,424 |
|
2023 |
$148,133,667 |
|
2024 (through March) |
$44,459,000 |
|
Total (through 2023) |
$973,503,248 |
|
Total (including partial 2024 data) |
$1,017,962,248 |
Alaska voters approved an initiative to regulate cannabis for adult use in November 2014, and the first adult-use stores opened in October 2016.
A number of factors initially resulted in slower revenue generation than in some other states. The state’s medical cannabis program did not have dispensaries, meaning there were no cannabis businesses that could transition to adult-use cultivators and retailers. As a result of a limited supply, many stores closed for large stretches of January 2017 or operated with reduced hours.[13]
Since sales began, Alaska has collected more than $160 million in cannabis excise tax revenue. Half of the revenue is invested in the Recidivism Reduction Fund which supports reentry programs for currently and formerly incarcerated individuals.[14]
Alaska experienced its second annual drop in cannabis tax revenue in 2023. However, both drops were far less than other mature states — perhaps because the tax is not based on a percentage of a price and because Alaska’s only neighbor (Canada) also has a mature legalization law. In 2023, Alaska’s cannabis excise tax revenue totaled $28 million.
A September 2022 report by the Urban-Brookings Tax Policy Center found Alaska’s tax rate would be the highest in the nation if average cannabis prices were $100/ounce. However, even with recent price drops, average prices are higher than $100/ounce — significantly so in some states,[15] so other states likely had higher effective tax rates than Alaska in 2022.
The below figures show Alaska’s year-by-year and total cannabis excise tax revenue. They do not include additional tax some localities impose.
|
Year |
State Tax Revenue from Adult-Use Cannabis[16] |
|---|---|
|
Oct. – Dec. 2016 |
$232,696 |
|
2017 |
$6,075,069 |
|
2018 |
$15,697,268 |
|
2019 |
$21,672,822 |
|
2020 |
$27,205,435 |
|
2021 |
$28,900,231 |
|
2022 |
$28,650,355 |
|
2023 |
$28,097,114 |
|
2024 (through February) |
$4,362,901 |
|
Total (through 2023) |
$156,530,990 |
|
Total (including partial 2024 data) |
$160,893,891 |
Nevada voters approved an initiative regulating cannabis for adult use in November 2016. The first adult-use stores were expected to be licensed in 2018, but the legislature and governor allowed medical cannabis dispensaries to sell to adults beginning on July 1, 2017.
In 2023, Nevada generated $178 million in cannabis tax revenue. Nevada’s total cannabis tax revenue crossed the $1 billion threshold in 2023, six and a half years into legal sales.
A substantial piece of the 15% wholesale tax paid by cannabis cultivators goes to local governments, while the remainder is deposited into the state’s Distributive School Account to fund public education. In 2022, $147 million was directed to the state’s K-12 education budget from sales generated by the adult-use cannabis market.[17] The 10% cannabis retail tax has added hundreds of millions of dollars to the state’s rainy day fund.
The below chart includes annual totals for Nevada’s cannabis excise taxes. The figures do not count standard local sales taxes.
|
Year |
State Tax Revenue from Adult-Use Cannabis[18] |
|---|---|
|
July – Dec. 2017 |
$43,766,296 |
|
2018 |
$120,111,184 |
|
2019 |
$149,696,436 |
|
2020 |
$172,493,138 |
|
2021 |
$225,714,199 |
|
2022 |
$196,952,338 |
|
2023 |
$178,135,259 |
|
2024 (through January) |
$17,941,200 |
|
Total (through 2023) |
$1,086,868,850 |
|
Total (including partial 2024 data) |
$1,104,810,050 |
California voters approved an initiative regulating cannabis for adults’ use in November 2016. The state’s first adult-use stores began to open in January 2018, but transition from the state’s unregulated, grey market to medical cannabis providers to a licensed and regulated system has been more gradual and less complete than anticipated. The state’s long history of illicit cannabis production, favorable growing conditions, and continued demand from prohibition states have also meant illegal cultivation remains prevalent. In addition, many localities continue to prohibit cannabis stores leaving swaths of prohibition that are still served by the untaxed illicit market.
California’s initial legalization law included a $9.25 per ounce tax on flowers, in addition to the current taxes, but that was removed in July 2022. Lawmakers were concerned the legal market was having difficulties competing against unregulated, untaxed sales. Several cities and counties in California have also reduced or eliminated local cannabis taxes.[19]
California has brought in over $5 billion in state cannabis tax revenue since legal sales began, and the state generated a total of just over $1 billion in cannabis taxes in 2023. While this is a slight increase from the past year’s revenue, it is still significantly lower than the nearly $1.3 billion in 2021, and lower than the $1.1 billion in 2020, though both years predated the tax decrease.
The voter-approved legalization law directs a significant portion of its cannabis tax revenues to local nonprofit programs that benefit people adversely impacted by punitive drug laws. By April 2021, more than $100 million had already been distributed to community groups.[20] In 2023, more than $50 million was awarded to community reinvestment grants.[21] The state also invests large chunks of cannabis revenue into childcare services and environmental programs. The below figures do not include local sales and special taxes established by municipalities across the state.
|
Year |
State Tax Revenue from Adult-Use Cannabis[22] |
|---|---|
|
2018 |
$397,343,905 |
|
2019 |
$638,347,979 |
|
2020 |
$1,110,476,931 |
|
2021 |
$1,361,747,183 |
|
2022 |
$1,115,967,422 |
|
2023 |
$1,082,452,368 |
|
Total |
$5,706,335,788 |
Massachusetts voters approved an initiative regulating cannabis for adults’ use in November 2016. The first adult-use stores opened in November 2018.
In 2023, Massachusetts again saw an increase in cannabis tax revenue generated compared to prior years, bringing in over $263 million.
With adult-use cannabis tax revenue collected so far, the state has invested millions of dollars into public transportation and local governments.[23]
Massachusetts allows cities and towns to impose an additional sales tax up to 3%. Figures below do not include those totals. As of December 2023, local cannabis taxes provided an additional $137.5 million in revenue to cities and towns in Massachusetts.
|
Year |
State Tax Revenue from Adult-Use Cannabis[24] |
|---|---|
|
Nov. – Dec. 2018 |
$678,134 |
|
2019 |
$66,243,027 |
|
2020 |
$111,963,388 |
|
2021 |
$227,474,843 |
|
2022 |
$250,710,415 |
|
2023 |
$263,488,752 |
|
2024 (through March) |
$68,673,105 |
|
Total (through 2023) |
$920,558,560 |
|
Total (including partial 2024 data) |
$989,231,664 |
Michigan voters approved an initiative to legalize and regulate cannabis for adults’ use in November 2018. Sales began in December 2019.
Through 2023, Michigan has collected more than $1 billion in adult-use cannabis tax revenues. Michigan has continued to see steady annual increases in tax revenues. Through 2023, none of its border states had legal adult-use sales, contributing to sales and revenue.
Revenue is distributed as follows:
In 2023, Michigan distributed more than $87 million in cannabis tax revenue to municipalities and counties, $101.6 million to the School Aid Fund for K-12 education, and another $101.6 million to the Michigan Transportation Fund.[26]
|
Year |
State Tax Revenue from Adult-Use Cannabis[27] |
|---|---|
|
Dec. 2019 |
$1,118,289 |
|
2020 |
$81,705,350 |
|
2021 |
$209,912,278 |
|
2022 |
$326,049,074 |
|
2023 |
$473,303,560 |
|
2024 (through March) |
$125,749,962 |
|
Total (through 2023) |
$1,092,088,551 |
|
Total (including partial 2024 data) |
$1,217,838,513 |
On June 25, 2019, Gov. J.B. Pritzker signed HB 1438 into law, legalizing and regulating cannabis for adults’ use. Sales from existing medical cannabis businesses began on January 1, 2020.
From 2022 to 2023, Illinois’ cannabis revenue slightly declined for the first time. That is at least partially because Missouri legalized recreational cannabis with one of the lowest excise tax rates in the nation, which reduced the out-of-state revenue and is a magnet for central Illinoisans trying to save money.
Illinois’ law puts a strong emphasis on social equity and repairing harms caused by enforcement of laws that criminalized cannabis. In addition to investing 20% of adult-use cannabis tax revenue into mental health services, the state directs 25% of the funds to the Recover, Reinvest, and Renew Program, which supports local organizations in developing programs that benefit disadvantaged communities. Illinois has distributed over $380 million to this fund since legal cannabis sales began.[28]
|
Year |
State Tax Revenue from Adult-Use Cannabis[29] |
|---|---|
|
2020 |
$216,525,000 |
|
2021 |
$509,358,442 |
|
2022 |
$562,119,019 |
|
2023 |
$552,166,729 |
|
2024 (through March) |
$139,640,338 |
|
Total (through 2023) |
$1,840,169,190 |
|
Total (including partial 2024 data) |
$1,979,809,528 |
Maine voters approved an initiative regulating cannabis for adults’ use in November 2016, but sales did not begin until October 9, 2020. In Maine’s third full year of cannabis sales, 2023, the state generated $10 million more than it did the year prior — $35.5 million in 2023, compared to $25.3 million in 2022.
The state’s legalization law divides cannabis tax revenue into two funds, one to support public health initiatives and the other for public safety and law enforcement training.
|
Year |
State Tax Revenue from Adult-Use Cannabis[30] |
|---|---|
|
Oct. – Dec. 2020 |
$1,156,878 |
|
2021 |
$12,362,622 |
|
2022 |
$25,329,534 |
|
2023 |
$35,593,347 |
|
2024 (through February) |
$6,421,139 |
|
Total (through 2023) |
$74,442,381 |
|
Total (including partial 2024 data) |
$80,863,520 |
Arizona voters approved an initiative regulating cannabis for adults’ use on November 3, 2020. Sales from existing medical cannabis businesses began on January 21, 2021.
In its third year of legal cannabis sales, Arizona topped over $1 billion in sales and brought in nearly $258 million in excise taxes and transaction privilege taxes on adult-use cannabis. After regulatory and enforcement costs are paid, Arizona’s law distributes a third of the cannabis tax revenue to community colleges, along with 10% to public health and criminal justice programs.[31]
|
Year |
State Tax Revenue from Adult-Use Cannabis[32] |
|---|---|
|
2021 |
$153,824,757 |
|
2022 |
$223,863,799 |
|
2023 |
$257,929,322 |
|
2024 (through March) |
$67,164,023 |
|
Total (through 2023) |
$635,617,878 |
|
Total (including partial 2024 data) |
$702,781,901 |
Montana voters approved an initiative regulating cannabis for adults’ use on November 3, 2020. Sales began in January 2022. In its second full year of sales, Montana generated over $51 million in cannabis excise taxes. State law directs that revenue to substance abuse recovery programs, conservation efforts, and services for veterans and their families.
|
Year |
State Tax Revenue from Adult-Use Cannabis[33] |
|---|---|
|
2022 |
$41,989,466 |
|
2023 |
$51,636,106 |
|
2024 (through March) |
$12,882,346 |
|
Total (through 2023) |
$93,625,572 |
|
Total (through 2024) |
$106,507,918 |
New Mexico’s Cannabis Regulation Act legalizes and regulates cannabis for adults 21 and older. It passed the legislature on March 31, 2021 during a special session called for that purpose by Gov. Michelle Lujan Grisham. Gov. Grisham signed the bill on April 12, 2021. Sales began on April 2, 2022. In its first full year of legal adult-use sales, New Mexico generated over $67.4 million in tax revenue.
Much of the cannabis excise tax revenue goes to the municipal governments where sales take place.
|
Year |
State Tax Revenue from Adult-Use Cannabis[34] |
|---|---|
|
April – Dec. 2022 |
$36,684,235 |
|
2023 |
$67,440,312 |
|
2024 (through March) |
$18,767,561 |
|
Total (through 2023) |
$104,124,547 |
|
Total (including partial 2024 data) |
$122,892,108 |
On November 3, 2020, more than two-thirds of New Jersey voters approved a constitutional amendment directing the legislature and the Cannabis Regulatory Commission to regulate cannabis for adults’ use.
In March 2021, lawmakers approved twin bills to implement the amendment. In addition to the standard sales taxes and local cannabis taxes, New Jersey’s law imposes social equity excise fees (SEEF) on sales from cultivators, which regulators can adjust each year. The cultivation excise fees started at one-third of one percent of average retail sales prices. Beginning nine months after adult-use sales begin, and every year thereafter, the Cannabis Regulatory Commission can revise the fees, with fees increasing as the average retail price of cannabis drops. The Commission can levy excise fees at the following rates:
Sales began on April 21, 2022.
As of December 2023, New Jersey retail prices averaged $354 per ounce of flower. The SEEF was $1.10 per ounce in 2022, and increased to $1.52 per ounce in 2023.[35] Beginning January 1, 2024, the SEEF was reduced to $1.24 per ounce of cannabis.[36]
Taxes from New Jersey’s legal cannabis market largely support goals to promote social equity. The law requires 70% of cannabis revenues to provide economic assistance and services to “impact zones,” which are areas of the state disproportionately affected by prior enforcement of cannabis criminalization laws. In 2023, Gov. Murphy announced that $5 million in tax revenue from legal cannabis sales will be used to help fund an initiative focused on stopping and preventing violence within the state.[37]
|
Year |
Tax and SEEF Revenue from Adult-Use Cannabis[38] |
|---|---|
|
April – Dec. 2022 |
$20,838,514[39] |
|
2023 |
$45,083,223 |
|
Total |
$65,921,737 |
On October 7, 2020, Gov. Phil Scott (R) allowed S. 54 to go into law without his signature. The law legalizes, regulates, and taxes cannabis sales for adults’ use. The legislature and governor had legalized personal possession and cultivation only in 2018. Regulated sales began on October 1, 2022.
In its first full year of legal sales, the small state generated over $21.3 million in cannabis excise taxes and sales taxes on adult-use cannabis. Vermont’s law requires that cannabis tax revenue be “used to fund a grant program to start or expand afterschool and summer learning programs, with a focus on increasing access in underserved areas.”[40]
|
Year |
State Tax Revenue from Adult-Use Cannabis[41] |
|---|---|
|
Oct.- Dec. 2022 |
$2,371,429 |
|
2023 |
$21,642,857 |
|
Total |
$24,014,286 |
On May 25, 2022, Gov. Dan McKee signed the Rhode Island Cannabis Act into law, legalizing and regulating cannabis for adults 21 and older. Sales began on December 1, 2022.
In its first full year of legal sales, Rhode Island generated over $12.6 million in state tax revenue from adult-use cannabis.
Cannabis excise tax revenue is deposited into a restricted receipt account within the state’s general fund. It can be used to support program administration; revenue collection and enforcement; substance use disorder prevention for adults and youth; education and public awareness campaigns, including awareness campaigns relating to driving under the influence of cannabis; treatment and recovery support services; public health monitoring, research, data collection, and surveillance; and law enforcement training and technology improvements, including grants to local law enforcement.
|
Year |
State Tax Revenue from Adult-Use Cannabis[42] |
|---|---|
|
Dec. 2022 |
$579,439 |
|
2023 |
$12,621,982 |
|
2024 (through February) |
$2,485,762 |
|
Total (through 2023) |
$13,201,421 |
|
Total (including partial 2024 data) |
$15,687,184 |
On March 31, 2021, then-Gov. Andrew Cuomo signed legislation (S.854-A/A.1248-A) legalizing and regulating cannabis for adults in New York. Sales began at a single location on December 29, 2022. We do not have tax revenue information for the three days in 2022 that New York had legal cannabis sales. Additional retailers opened in 2023.
New York has had one of the rockiest transitions to adult-use legal sales. A very small number of legal cannabis stores were authorized initially, while thousands of unlicensed cannabis stores began openly operating.[43] The unlicensed stores employ signage and other marketing that is prohibited on the regulated market, and this has resulted in far less per capita revenue than other states have been able to realize.
After regulatory and administrative costs, 40% of cannabis revenue goes to community reinvestment grants, 20% goes to public schools, and 40% supports drug treatment and public health programs.[44]
|
Year |
State Tax Revenue from Adult-Use Cannabis |
|---|---|
|
2023 |
approximately $21,000,000 |
|
Total |
approximately $21,000,000 |
On June 22, 2021, Gov. Ned Lamont signed S.B. 1201 — “An Act Concerning the Equitable and Responsible Regulation of Cannabis” — into law, after it passed the Connecticut House and Senate.
Sales began on January 10, 2023. In its first year of legal sales, Connecticut generated over $24 million in state tax revenue from adult-use cannabis. This exceeds New York’s estimated tax revenue, although New York has more than five times Connecticut’s population.
Twenty-five percent of the excise tax goes to the Prevention and Recovery Services Fund. Until June 30, 2026, 60% of the excise tax goes to the Social Equity and Innovation Fund. On July 1, 2026, that would increase to 65%. Beginning on July 1, 2028, it would increase again and would remain at 75%.
The 3% tax that goes to municipalities must be used for one of five specific purposes, such as re-entry services, mental health or addiction services, youth services bureaus, and streetscape improvements near cannabis retailers.
|
Year |
State Tax Revenue from Adult-Use Cannabis[45] |
|---|---|
|
Jan. 10 - Dec. 2023 |
$24,613,367 |
|
2024 (through February) |
$4,905,010 |
|
Total (through 2023) |
$24,613,367 |
|
Total (including partial 2024 data) |
$29,518,377 |
Missouri voters approved an initiative regulating cannabis for adults’ use on November 8, 2022. Sales from existing medical cannabis businesses began on February 6, 2023. In its first year of legal sales, Missouri generated nearly $106 million in state tax revenue from adult-use cannabis.
After retaining no more than 2% of tax revenues, the Department of Revenue deposits the remainder into the “Veterans, Health, and Community Reinvestment Fund.” The fund initially covers any additional implementation costs, including the expungement of past cannabis convictions. The remainder is split evenly between three categories: veterans services, community grants related to treating substance use disorder and preventing drug overdose deaths, and the public defender system. In 2023, over $3.8 million was distributed equally among these three categories.[46]
|
Year |
State Tax Revenue from Adult-Use Cannabis[47] |
|---|---|
|
Feb. 6 - Dec. 2023 |
$105,941,225 |
|
2024 (through March) |
$30,859,050 |
|
Total (through 2023) |
$105,941,225 |
|
Total (including partial 2024 data) |
$136,800,275 |
On November 8, 2022, Maryland voters overwhelmingly approved a legislatively referred ballot measure to legalize adults’ possession of cannabis. Existing medical dispensaries began sales to adult-use consumers on July 1, 2023, and a lottery was held in April 2024 for new social equity licenses. The state generated more than $40 million in cannabis tax revenue in the first nine months of legal adult-use sales.
Maryland imposes a 9% retail tax on cannabis sales, which is one of the lowest cannabis tax rates in the nation. After administrative costs, tax revenue is distributed to a Community Reinvestment and Repair Fund (35%, until fiscal year 2033), a Cannabis Business Assistance Fund (5% until 2028), to counties (5% with half going to municipalities), and the Cannabis Public Health Fund (5%). The remainder goes to the General Fund.
|
Year |
State Tax Revenue from Adult-Use Cannabis[48] |
|---|---|
|
July 1 - Dec. 2023 |
$29,880,000 |
|
2024 (through March) |
$10,350,000 |
|
Total (through 2023) |
$29,880,00 |
|
Total (including partial 2024 data) |
$40,230,000 |
On April 22 and April 26, 2023, Gov. John Carney (D) allowed companion legalization bills — HB 1 and HB 2 — to become law without his signature. Cannabis business licenses are anticipated in 2025. Cannabis will be taxed at 15% at the point of retail sales to consumers. Seven percent of the proceeds are allocated to a Justice Reinvestment Fund, while the remainder will be deposited in the General Fund.
On November 7, 2023, voters approved Issue 2, making Ohio the 24th state to legalize cannabis for adults 21 and older. Legal adult-use cannabis sales have not begun in the state yet, but they are anticipated in July 2024.
Ohio’s legalization law imposes a 10% sales tax on cannabis and will allocate cannabis tax revenue to: 36% for the social equity and jobs programs; 36% to communities hosting adult-use cannabis dispensaries; 25% to substance use disorder education and treatment; and 3% for cannabis regulatory and administrative costs.
|
Year |
States' Cannabis Tax Revenue |
|---|---|
|
2014 |
$68,503,980 |
|
2015 |
$264,211,871 |
|
2016 |
$530,521,110 |
|
2017 |
$736,534,982 |
|
2018 |
$1,308,693,928 |
|
2019 |
$1,749,459,667 |
|
2020 |
$2,856,307,217 |
|
2021 |
$3,934,089,074 |
|
2022 |
$3,816,898,917 |
|
2023 |
$4,188,431,717 |
|
2024 (very partial) |
$614,399,098 |
|
Total (through 2023) |
$19,453,652,463 |
|
Total (including very partial 2024 data) |
$20,068,051,561 |
Cannabis legalization offers tremendous financial benefits for state governments and social services and programs. By establishing regulated adult-use cannabis markets, state and local governments are able to tax cannabis sales and benefit economically by creating thousands of new jobs. In many states with taxed and regulated cannabis markets, overall sales and tax revenue have quickly exceeded initial estimates.
It is important to note that the financial impact of legalizing and regulating cannabis for adult use is one of the many benefits of legalization. Adult-use cannabis legalization has also displaced the criminal market and freed up law enforcement resources to focus on serious crime. In legalization states, authorities actually know who is selling cannabis, where it is being sold, when, and to whom, because cannabis is produced and sold by legitimate, tax-paying businesses instead of drug cartels and criminals. Hundreds of thousands of individuals have been spared traumatic arrests, possible incarceration, and criminal records that shut the door of opportunity. Meanwhile, teenagers’ cannabis use rates haven’t increased, and voter support has grown.
[1] "Marijuana Sales Report January 2014 to Date," Colorado Department of Revenue, https://docs.google.com/spreadsheets/d/1wE7Z_1q2zxL7-kP0AqlUvL731U3Aui1l/edit?rtpof=true&sd=true#gid=1586361587 ; Michael Roberts, "Medical marijuana revenues in Colorado for 2012: $199 million-plus," Westword, June 4, 2013. https://www.westword.com/news/medical-marijuana-revenues-in-colorado-for-2012-199-million-plus-5848937
[2] https://cdor.colorado.gov/data-and-reports/marijuana-data/marijuana-tax-reports; https://docs.google.com/spreadsheets/d/1e8hnG64Vkg9ffgkNpKQ1kzPsXNbGjG2X/edit#gid=208699827 "Marijuana_Tax_Revenue_2014_To_Date_Report," Totals of columns G, J, and K
[3] https://www.denvergov.org/Government/Departments/Marijuana-Information-Office/Data-and-Statistics
[4] https://cdor.colorado.gov/data-and-reports/marijuana-data/marijuana-tax-reports;
[5] Because states’ tax methods and prices differ, this changes as wholesale and retail prices change. For example, Alaska’s $50/ounce tax would be higher than Washington’s 37% excise tax + standard 6.5% sales tax if average prices were below $114.94/ounce in both states.
[6] https://dor.wa.gov/sites/default/files/2023-03/Table1_2022.pdf
[7] https://crosscut.com/news/2021/02/how-1-billion-pot-taxes-gets-spent-washington-state
[8] https://dor.wa.gov/about/statistics-reports/recreational-and-medical-marijuana-taxes "Cannabis sales tax table"; "Estimated state sales tax collections" plus applying the 37% tax to "Total retail value of cannabis and cannabis products (before tax)")
[9] Monthly excise tax data: https://www.502data.com/ (for data prior to 2017); Monthly sales tax data and excise tax estimates based on sales volume provided here: https://dor.wa.gov/about/statistics-reports/recreational-and-medical-marijuana-taxes
[10]Carmine Gemei, "Ripple Effect: Measure 110's impact on where your cannabis tax money goes," KTVL, April 16, 2022.
[11] https://www.oregon.gov/dor/programs/gov-research/Documents/Financial%20reporting%20receipts%20public.pdf
[12] https://www.oregon.gov/dor/gov-research/Pages/default.aspx#marijuana_tax
[13] Laurel Andrews, “Legal weed is hard to come by in Alaska,” Alaska Dispatch News, January 5, 2017.
[14] https://tax.alaska.gov/programs/programs/reports/Annual.aspx?60000&Year=2020
[15] https://www.priceofweed.com/prices/United-States.html (accessed April 24, 2024)
[16] http://tax.alaska.gov/programs/programs/reports/index.aspx?60000
[17] https://thenevadaindependent.com/article/nevada-cannabis-industry-sees-965-million-in-annual-sales-transmits-147-million-to-education
[18] https://tax.nv.gov/Publications/Cannabis_Statistics_and_Reports/
[19] https://mjbizdaily.com/california-cities-counties-cut-cannabis-taxes/
[20]Jim Rendon, "Nonprofits gain funding from unusual source: Marijuana sales," AP, April 23, 2021. https://apnews.com/article/marijuana-business-california-recreational-marijuana-ae20c17fc439570783d6be602e2e4e6f
[21]https://www.marijuanamoment.net/california-officials-award-more-than-50-million-in-marijuana-tax-funded-community-reinvestment-grants/
[22] https://www.cdtfa.ca.gov/dataportal/dataset.htm?url=CannabisTaxRevenues
[23] https://www.masslive.com/marijuana/2020/08/heres-where-marijuana-tax-revenue-has-gone-in-massachusetts.html
[24] https://cthru.data.socrata.com/dataset/Total-Tax-Revenue-Collections/me5t-fei2
[25] https://www.michigan.gov/treasury/local/share/marijuana/adult-use
[26]https://www.michigan.gov/treasury/news/2024/02/29/adult-use-marijuana-payments-being-distributed-to-michigan-municipalities-and-counties#
[27] https://www.michigan.gov/lara/0,4601,7-154-89334_79571_93032-497635--,00.html
[28] https://www.illinoispolicy.org/how-does-illinois-spend-millions-in-cannabis-cash/
[29] See the “Cannabis” tab of the reports linked on this webpage for the cultivation and retail excise taxes: https://tax.illinois.gov/research/taxstats/collectionscomptroller.html; In-state residents and out of state residents sales chart: https://public.data.illinois.gov/t/Public/views/CannabisSalesFigures/AdultUseCannabisSales?%3Aembed=y&%3Aiid=1&%3AisGuestRedirectFromVizportal=y
[30] https://www.maine.gov/revenue/taxes/tax-policy-office/sales-tax-reports
[31] https://www.azleg.gov/jlbc/20novI-23-2020fn730.pdf
[32] https://azdor.gov/reports-statistics-and-legal-research/marijuana-tax-collection ; https://azdor.gov/sites/default/files/document/MJ_2024-03_byCategory.pdf
[33] https://mtrevenue.gov/cannabis-sales-reports/
[34] Sales data available at: https://qimw5q0w5j.execute-api.us-west-2.amazonaws.com/prod/default.html (multiplied by tax rates)
[35] https://www.cannabisbusinesstimes.com/news/new-jersey-cannabis-sales-trends-q3-2023/
[36] https://www.nj.gov/treasury/taxation/cannabis/recreational/seef.shtml
[37] https://www.njoag.gov/governor-murphy-attorney-general-platkin-announce-15-million-in-violence-prevention-and-intervention-grants-available-for-community-organizations/
[38] https://www.nj.gov/cannabis/documents/Quarterlies/Rec%20Med%20sales%20Q4%2023.pdf
[39] Note: Last year’s report only included New Jersey’s tax revenue, not the SEEF for 2022.
[40] See: Adam Sullivan, "Cannabis tax revenue growing in Vermont" WCAX 3, Feb. 20, 2023 https://www.wcax.com/2023/02/20/cannabis-tax-revenue-growing-vermont/ (excise tax figures are included in it, sales tax are calculated from those figures)
[41] https://tax.vermont.gov/data-and-statistics/cannabis-excise-tax (All figures are rounded to the nearest $10,000)
[42] https://dbr.ri.gov/sites/g/files/xkgbur696/files/2024-03/February%2024%20Sales%20Data%20%26%20Chart%201.pdf — Multiplied Retail Sales (Recreational) by the tax rates
[43] See: Mona Zhang, "New York eyes crackdown on illicit weed shops. Will it work?," Politico, April 10, 2024.
[44] https://cannabis.ny.gov/system/files/documents/2022/04/cannabis-management-fact-sheet-taxation-03.pdf Estimate based on extrapolation based on data from the graph on p. 20 and Table 8 on p. 19. Data on p. 20 shows sales from Jan 1 - Nov 30 total $122.9 million. Conservatively estimating $18 million in sales in December would mean a total of $141.1 in total sales in 2023. Table 8 shows a total of $11,702,000 in adult-use tax revenue was collected in April 1 through September 30, 2023. During that time, p. 20 shows a total of $77.5 million in sales, for a total tax rate of just over 15%. Applying the same rate to $141.1 million in sales would be $21.165 million.
[45]Excise taxes: https://data.ct.gov/Tax-and-Revenue/Cannabis-Tax/jey2-vq68/data_preview Sales taxes calculated from sales here: https://data.ct.gov/Health-and-Human-Services/Cannabis-Retail-Sales-by-Month/f382-bnu5
[46] https://www.kbia.org/missouri-news/2023-11-03/state-disburses-marijuana-sales-tax-revenue
[47] Calculated by applying excise tax and sales taxes to the adult-use sales figures posted here: https://health.mo.gov/safety/cannabis/img/cumulative-monthly-sales.jpg Note that the sales figures all rounded to the nearest $100,000, so the tax figures are not precise.
[48] https://cannabis.maryland.gov/Pages/Data-Dashboard.aspx (Revenue figures rounded to nearest million)