2020 Marijuana Tax Revenue by State (Map)

Marijuana Tax Revenue by State

Usually, when marijuana tax revenue by state is discussed, two questions are bound to arise:

  • How much money are we talking about?
  • Where does all that money go?

We’re going to answer both of them, thus providing more material for the legalization battle. As a matter of fact, state taxes are used as the main arguments in the fight for more recreational weed states. This comes as little wonder if one knows that the (legal) cannabis market size in the US was worth an astonishing $13.6 billion in 2019.

And it keeps on growing!

How Much Marijuana Tax Revenue Can We Expect?

If we bear in mind the size of the US cannabis market, the figures are beyond impressive. Let’s just name a few:

  • The CBD industry will increase by 700% until next year.
  • US sales of CBD and hemp oil products reached $238 million in 2018..
  • Legal cannabis sales should reach about $30 billion by 2025, according to the New Frontier Data.
  • 59% of cannabis users consume it at least once a week.
  • 55 million Americans (around 17% of the population) use cannabis regularly.
  • More than 64,000 cannabis-related jobs were created in 2018.

In the states where weed is legal for recreational or medical purposes, marijuana tax revenue by state looks like this:Marijuana Tax Revenue by State - MapIn the case of the states where weed is not legal, the estimates are based on the average marijuana tax. Cannabis taxes vary greatly across states. The highest cannabis taxes are in Washington—a staggering 37%! The next one in line is Oregon, with 17%. California and Colorado follow with 15% each, while Maine is the fifth position with 10%.

Is Colorado Marijuana Tax Revenue Really That Big?

The tax revenue that has definitely attracted the most attention comes from the state of Colorado. The figure is truly impressive—the Centennial State has collected over $1 billion dollars in tax revenues from cannabis from the moment its recreational cannabis legislation was signed back in 2012. The average monthly income never went below $20 million since 2017. However, the very first month of Colorado’s tax revenue from weed wasn’t that promising with a “mere” $3.5 million.

Joining the states with legal weed was one of the best decisions that Colorado could have made. Currently, there are over 40,000 people working in 3,000 licensed cannabis businesses. Therefore, it’s not all about the Colorado state tax and its application. Legalization means high employment rates too, thus acting as an economy booster.

Still, Washington state taxes are in the first place with $362 million in revenue from cannabis.

What Can Be Done with Tax Revenue from Weed?

Generally, healthcare, education, drug abuse prevention, and law enforcement get their fair share. Each state’s legal body decides on the exact distribution. If we take a look at one of the biggest revenue makers, Colorado has so far spent 31.7% on human services, public health and environment received 20.7%, while education and local affairs got about 16% each.

Similarly, Washington, currently earning the most, spends up to 55% on healthcare. $173 million were allocated to medical insurance for low-income citizens, for example. 40% of Oregon’s marijuana tax revenue went to state schools; health and addiction services received 20%, while Oregon State Police benefited with 15%.

Therefore, it is up to each state to determine how exactly they are going to distribute the last year’s revenue from marijuana taxes. Eventually, the advantages of the financial boost are felt on the state and local levels.

Potential Issues

California weed taxes are a bit of a warning story, though.

The state’s weed revenue wasn’t large enough in July 2018 to cover youth education programs as $44.4 million didn’t suffice. Marijuana tax revenue by state has to be analyzed by a sufficient number of regulatory bodies, so the administrative costs were $27.6 million. For this reason, there wasn’t enough funding for youth education and prevention. In 2019, though, the tax revenue abounds—$345.2 million.

What can we conclude from this example? Basically, the cannabis market is unstable and fluctuations can be unpredictable. Some states end up with more US tax revenue than they hoped, whereas others have to deal with losses. For example, California marijuana tax revenue is forecast to surpass Washington’s in 2020. The Golden State is supposed to reach $3.1 billion from adult use of cannabis, leaving Washington far behind with only $1.6 billion.

As a result, it is advisable that the states set some money aside for the rainy days. Despite the fact that legal weed states can earn huge profits, they are not 100% guaranteed.

How Many States Have Legalized Weed?

At the moment, 33 states have legalized medicinal cannabis, whereas Illinois has just joined the crowd of recreational weed states. The following 11 states (District of Columbia included) are looking forward to the greatest tax revenue from marijuana: Washington, Colorado, California, Alaska, Maine, Michigan, Nevada, Oregon, Vermont, Illinois, and Massachusetts.

Nevertheless, that does not mean that you can light up a joint at any public place in these 11 states. Each one has its own laws regarding cannabis, so you had better study them properly before getting loose.

The Bottom Line

How to make the most out of cannabis legalization? Washington’s marijuana tax revenue is the highest in the country, as well as its tax rates. Does that mean that all the other states should follow suit? We’d dare to disagree.

Arguably, cannabis businesses still need a lot of support to thrive, especially as funding is far from easy when you are not eligible for bank loans. Not to mention the recent drops in the cannabis stock market. Ultimately, it is what the money is spent on that makes the most difference for the citizens. Less bureaucracy and smaller administrative costs would certainly secure larger funds.

If we take a look at the potential marijuana tax revenue by state (should the states which still haven’t legalized marijuana, legalize it), it is clear that all that money that’s right there for the taking can be used to significantly improve the lives of its citizens.

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