Cannabis excise taxes last year in adult-use states exceeded those of alcohol by 20% with cannabis taxes in most states outpacing those of alcohol, according to an Institute on Taxation and Economic Policy (ITEP) report. However, neither cannabis nor alcohol taxes reached the revenue of tobacco taxes.
In all, the 11 states that had functioning adult-use markets from 2021 through April 15 collected $2.958 billion in cannabis excise taxes, compared to the $2.474 billion collected from alcohol excise taxes in those states. Tobacco excise tax revenues reached $5.9 billion in those 11 states during that time.
Only Alaska, Maine, Michigan, and Oregon saw more revenues from alcohol excise taxes than that from cannabis excise taxes, according to ITEP figures. Notably, Alaska has a higher alcohol tax rate than most states (15 cents per shot of liquor, for example), and Maine, Michigan, and Oregon are so-called “control states” that generate profit directly at state-run liquor stores, the report says.
Colorado raised seven times more in cannabis excise taxes than it did on excise taxes on alcohol. The state has among the lowest alcohol tax rates in the nation: 2.7 cents per shot of liquor, 1.3 cents per glass of wine, or 1 cent per pint of beer. Cannabis taxes in Colorado are levied at higher rates per serving – a 5-milligram edible might incur around 16 cents of state tax, the report says. Colorado joined Washington State as the only two states that saw cannabis tax revenues outpace those of tobacco; state-level tobacco excise taxes in the 11 states range from 9 to 18 cents per cigarette.
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