Report: Legal Cannabis States Have Garnered $10.4B in Tax Revenue Since 2014


At this point, it’s no secret that legal cannabis across a number of states in the U.S. is creating a major boom in tax revenue throughout the country, giving millions of adults access to new medicine and a recreational alternative to liquor. That sentiment was confirmed by the Marijuana Policy Project (MPP) last week, when the Washington D.C.-based lobbying powerhouse found that legalized cannabis has garnered more than $10 billion in cannabis tax revenue since legal sales first began in 2014.

The report starts, noting adult-use cannabis as a “wide investment” for states across the country. “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,” it adds.

“As of December 2021, states reported a combined total of $10.4 billion in tax revenue from legal, adult-use cannabis sales, with more than $3 billion reported in 2021 so far (states have not yet reported revenue totals for the last one to three months of the year),” the report states.

MPP’s Director of State Policies Karen O’Keefe expanded, “States that have legalized cannabis for adults are reaping significant economic benefits. The legal adult-use cannabis industry has now generated over $10 billion in new tax revenue, and in many instances that revenue is being distributed to much needed public services and programs, including reinvesting in communities that were devastated by the war on drugs.”

O’Keefe added that the alternative, prohibition, is a stark contrast to reform, in that it costs taxpayers billions of dollars a year to enforce. Additionally, states with legal, adult-use cannabis sales can use tax revenue to allocate for social services and programs.

The report noted that states with legal cannabis have raised $3 billion so far in 2021 alone, with most state reports totaling one to three months prior to the current day. This means that the 2021 figure could potentially pass the $4 billion threshold for year-end totals.

Last year was also major for cannabis reform throughout the country, with eight of the 18 states with legal retail cannabis making the move in 2021, though only one of those eight states launched sales the same year. The MPP report includes 11 states with that in mind, reporting that retail sales allocate a significant portion of tax revenue for social services and programs, including education, public libraries, behavioral health, substance abuse treatment, veterans’ services, job training, conviction expungement and reinvesting in communities disproportionately affected by the War on Drugs.

The report breaks down some of these strides by state:

Alaska fields half of all adult-use cannabis tax revenue back to the Recidivism Reduction Fund, supporting reentry programs for currently and formerly incarcerated people. California has distributed more than $100 million to community groups and local nonprofit programs that benefit people adversely impacted by punitive drug laws. Colorado has dedicated $71.9 million of the total revenue from cannabis to improve Colorado’s public school system.

Illinois has not only invested 20 percent of adult-use cannabis tax revenue into mental health services, but the state also directs 25 percent of the funds to the Recover, Reinvest and Renew Program, supporting local organizations in developing programs benefiting disadvantaged communities. Michigan’s Department of Treasury reported in early 2021 that the state has used around $11.6 million in cannabis taxes collected in 2020 to go toward the School Aid Fund for K-12 education. Washington has also funneled nearly $600 million into public health initiatives for every $1 billion in revenue collected for cannabis sales tax.

The report also includes the tax structure for each state, the total revenue generated each year and additional information surrounding cannabis revenue and its distribution to public services and programs.

The full MPP report is available here.

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