By / March 4, 2020

California raised over $600 million through cannabis legalization

The State of California raised $635 million in taxes related to the recreational cannabis industry, legalized through Proposition 64 in 2016. California’s revenue increased by about 35% from 2018 to 2019, contributing to further support and improvements in education and health.

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In the 2019-2020 fiscal year expenses with cannabis tax revenues were used for:

  • Anti-drug programs for young people (60%).
  • Environment (20%).
  • Public security allowances (20%).

In the first fiscal year 2019-2020, revenues totaled around $200 million, with an estimated $332.8 million for the fiscal year 2020-2021.

The money is distributed as follows:

  • $140.8 million for 11.000 low-income children in child care.
  • $44.8 million in public health and safety subsidies in cities that allow free care facilities and medicines for low-income patients (with subsidies only for cities and districts that allow cannabis to be marketed).
  • $39.9 million donations to combat illegal growth and the restoration of wild areas.
  • $25.3 million in taxes on cannabis intended for activities such as the removal of weapons, methamphetamines, herbicides, river contaminants, etc.
  • $37.5 million to help thousands of at-risk young people.
  • $30 million in community subsidies for re-investment for social workers.
  • $21.8 million for safe roads.
  • $57.8 million to license and regulate the cannabis industry.
  • $15 million for scientific and political research on cannabis.
  • $100 million in local taxes for cannabis businesses such as new parks, police cars and ambulances in California.

California’s cannabis program

One in five Americans has access to legal cannabis after California joined the list of states that allows the trade and consumption of cannabis for recreational use. (Source)

California’s two-year program is larger than Colorado’s six-year program, which is another state that has seen its revenue increased considerably after legalization. According to the U.S. channel CNBC’s website, it took the government of Colorado about three and a half years to reach $500 million in the total of cannabis sales revenues, and about two years to double that revenue. Despite this, cannabis sales have contributed to the state’s general reserve funds in addition to education and health care, including mental health services and drug prevention programs for youth.

According to the New York Observer website, economics and psychology researchers at California State Polytechnic University and the University of New Mexico have analyzed sales of prescription drugs that aid sleep disorder in some Colorado countries. Researchers examined the sales data before and after the start of recreational cannabis sales in that state in January 2014. In the years prior to the legalization of cannabis sales, sales increased.

Cannabis therapy

However, it stopped when cannabis was legalized and whenever a drug store opened, sales of over-the-counter drugs remained static and the growth in sales of products that aid insomnia decreased by 236%. The study was published in the journal Complementary Therapies in Medicine. Scientists still can’t explain why cannabis helps with sleep disorders.

However, research has shown that medicinal cannabis can even help and decrease the consumption of prescribed and non-prescribed drugs. Colorado has generated over $1 million in revenue from the cannabis industry alone.


(Featured image by davide ragusa via Unsplash)

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