Tax Revenues Hit Over $15 Billion in US States

According to a new report released Monday by the Marijuana Policy Project (MPP), from 2014 to 2022, states that legalized cannabis for recreational use collected a total of more than $15 billion in tax revenues from adult-use cannabis sales.

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Covid Dealt a Hit to Cannabis Tax Revenues

However, while legalized states received about $3.8 billion in cannabis taxes in 2022, this was the first year that revenues were lower than the previous year. Experts attribute this to a “multitude of factors,” such as COVID-19-related policies and current trends.

In 2022, tax revenues were nearly $100 million lower than in 2021, although last year, more states, such as New Jersey and New Mexico, launched their recreational markets, which in theory, should lead to higher tax revenues.

States where cannabis legalization is relatively new saw higher tax revenues, but the six states with the most established markets saw declines that offset those gains.

State-by-State Cannabis Tax Revenues

State-by-state cannabis tax revenues over the years

Here is a breakdown of tax revenues for each state in 2022 and for the country as a whole year by year, according to a report published by the Marijuana Policy Project:

State	Tax Revenues
Alaska	$28,649,408
Arizona	$223,863,799
California	$1,074,560,287
Colorado	$305,034,034
Illinois	$562,119,019
Maine	$25,329,534
Massachusetts	$250,710,415
Michigan	$326,049,074
Montana	$41,989,466
Nevada	$196,952,338
New Jersey	$20,139,655
New Mexico	$36,684,235
Rhode Island	$579,439
Oregon	$150,316,424
Washington	$529,443,420
Vermont	$2,363,000

Table with tax revenues from 2014-2022 for all states:

Year	Tax Revenues
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	$2,814,837,199
2021	$3,866,974,690
2022	$3,774,783,548
Together	$15,114,520,975

Tax Revenues Bring Benefits to States

Toi Hutchinson, president and CEO of MPP, said that states that have implemented legalization “benefit from hundreds of millions of dollars in tax revenue each year.” These new revenue streams help fund important social services and programs across the country, such as education, treatment for alcoholism and drug addiction, support for veterans, job training, and reinvestment in communities that have been disproportionately affected by the war on drugs. “States that fall behind not only harm their citizens but also lose potential revenue,” – Hutchinson added.

The new report only considers revenue from recreational cannabis and does not take into account sales conducted through separate medical cannabis programs in each state.

Growing Tax Revenues in the Future

As new markets mature – and with states such as Delaware and Maryland also about to launch legal cannabis markets following the recent end of prohibition – tax revenues are expected to grow in the coming years.

States that have yet to legalize adult-use cannabis are seeing record cannabis sales as more businesses get licenses and consumers move into the regulated sector.

In March, for example, cannabis sales in Michigan reached a record high, with nearly $250 million in combined recreational and medical cannabis purchases, according to state regulators.

Also in March, the state of Connecticut reported a record $22 million from combined recreational and medical cannabis sales.

In Missouri, cannabis sales reached a record $126 million that same month, the second month since adult-use cannabis stores opened after voters approved legalization on the November ballot.

New Mexico’s governor recently marked the first anniversary of the adult-use cannabis market in his state, boasting more than $300 million in sales since last April and thousands of jobs created by the cannabis industry.

In Arizona, total adult-use cannabis sales reached $1.4 billion in 2022.

In Massachusetts, the recreational market officially surpassed $4 billion in sales in January after launching in 2018.

On the other hand, a Wisconsin senator recently released a legislative analysis that showed how much money in tax revenues her state lost to Illinois last year when Wisconsin residents with an unregulated market crossed the line and spent more than $121 million on cannabis.

Conclusion

Despite a decline in adult-use cannabis tax revenues in 2022, revenues are expected to increase in the future as new markets mature, and more states end prohibition. In the meantime, states that have legalized cannabis continue to reap financial benefits that help support various social programs and services. States that have not yet decided to legalize risk losing potential revenue and opportunities to improve the lives of their citizens.

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(Featured image by Element5 Digital via Pexels)

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