Adult-Use Legalization Has Led to $7.9B in Tax Revenues for States

Adult-use cannabis legalization in the U.S. has led so far to a combined total tax revenue of $7.9 billion in states that have approved the reforms, according to a Marijuana Policy Project report. Washington state, which launched adult-use sales in 2014, has seen the most cannabis-derived income with nearly $2.6 billion in revenues from sales, according to the analysis.

Colorado, which also launched sales in 2014, has taken in more than $1.5 billion and, as of April, the state’s public schools have received $404.5 million of the total revenue generated from adult-use cannabis sales in the state.

California, where adult-use sales began in 2018 despite being the first state to legalize cannabis for medical use, has collected about $2.1 billion from adult-use sales. The state saw a 62% revenue increase from cannabis sales from 2019 – about $638 million – to 2020 when revenues reached $1 billion for the first time.

Oregon, which launched adult-use sales in 2016, has garnered slightly more than $540 million over nearly six years of sales, which 40% of revenues being distributed to schools.

Nevada has generated $374 million from cannabis sales since they began in the state in 2017. In the first two months of 2021, the state had netted about one-fifth of the total tax revenues it saw in 2020.

Illinois, which launched adult-use sales six months after the Legislature approved the reforms, has already added nearly $295 million to its coffers from adult-use cannabis sales. In 2020 – the first year of sales – the state generated $174.9 million from sales and almost $120 million already this year.

Massachusetts, the first New England state to allow sales, despite being the second (after Maine) to approve the reforms, has gleaned more than $260 million from adult-use sales, which began in 2018. Through the first two months of this year, the state has already collected nearly half (about $64 million) of what it saw it collected in all of last year (about $118.5 million).

Michigan has reaped about $137 million from adult-use sales since 2019. The state Department of Treasury reported in March that nearly $10 million has been disbursed to municipalities and counties and around $11.6 million will be sent, this year, to the School Aid Fund for K-12 education and another $11.6 million to the Michigan Transportation Fund, once appropriated.

Alaska, the least populated of all the states to legalize adult-use sales, has garnered $78.2 million since the retail launch in 2016. The MPP notes that “a number of factors initially resulted in slower revenue generation than in some other states,” including the lack of dispensaries allowed under the state’s medical cannabis program, which limited the number of businesses that could transition to the adult-use market. The report also said that, due to a limited supply chain, “many stores closed for large stretches of January 2017 or operated with reduced hours.”

Maine has, so far, seen the lowest amount of revenue from adult-use sales, with just $1.7 million since last year. The rollout of retail sales, which voters approved in 2016, was marred by vetoes from former Republican Gov. Paul LePage and then slowed by the coronavirus pandemic.

So far this year, lawmakers in New York, New Mexico, and Virginia have approved the reforms, but sales have not commenced. During the 2020 election, voters in New Jersey, Arizona, Montana, and South Dakota approved adult-use sales; however, in South Dakota the amendment is being challenged in the state Supreme Court.

In Vermont, which legalized use, possession, and cultivation but not sales in 2018, an adult-use market is expected to open next year.