Legalizing cannabis for adults has provided states a new revenue stream to bolster budgets and fund important services and programs.
As of November 2020, states reported a combined total of $6.59 billion in tax revenue from legal, adult-use cannabis sales. Just imagine what that number would be if the states put pressure on municipalities to issues more permits to operators, in turn, taking advantage of the estimations of upwards of 70-80% cannabis sales not being taxed due to illegal or traditional market sales, like in California.
Since 2012, 15 states have enacted laws legalizing, taxing, and regulating cannabis for adults 21 and older. Five of the laws just passed in 2020 in states where licensing has not yet begun.
This is a review of each state’s tax rate, population, and state tax revenue for adult-use cannabis thanks to our friends at the Marijuana Policy Project.
1. Alaska (pop. 0.7 million) | Tax rate: $50/ounce at wholesale
Alaska voters approved an initiative to regulate cannabis for adult-use in November 2014. The first adult-use stores opened in October 2016. A number of factors initially resulted in slower revenue generation.
Image from MPP.org
2. Arizona (pop. 7.3 million) | Tax rate: 16% excise tax on sales; 5.6% standard transaction privilege tax
Arizona voters approved an initiative regulating cannabis for adult-use, sales have not yet begun.
3. California (pop. 39.6 million) | Tax rate: $9.25 per ounce for flowers or $2.75 on leaves/trim; 15% excise tax; 7.25% standard sales tax
California voters approved an initiative regulating cannabis for adult-use in November 2016. The state’s first adult-use stores began to open in January 2018, yet the transition from unregulated, grey market providers to a licensed and regulated system has been more gradual than anticipated. In addition, localities have been slow to