Cannabis Excise Tax Revenue

How much do states stand to gain from legalization?


It is not news that Marijuana has become big business. Millions of users spend billions of dollars on it each year. Over fifteen states currently permit personal purchase, possession, and use, with at least two more scheduled to join them this summer. An interesting question is how much states stand to gain from legalization?

Well, 24/7 Wall St. (news source featuring primarily financial news) ranked all 50 states based on estimated annual generated excise tax revenue from legalized marijuana sales. 

The numbers of people smoking and thus the profits state governments might see vary considerably from place to place. The Tax Foundation estimates that more than 22% of adults in Vermont, for instance, used marijuana in a recent 30-day period, but there are fewer than 500,000 people in the state.

In contrast, the figure for Texas is only 7%, but the state has a population of more than 20 million adults, which means a lot more money going up in smoke. Potential revenues, also, span a wide range. Wyoming, which has a tiny population and a relatively low level of marijuana use, might see $11 million annually, while California, the most populous state and one whose consumption is above average, could bring in $1.2 billion. 

Whether it is legal or not, people will still use marijuana.

And every state stands to gain from taxing those users, rather than spending the money to jail them. Regardless of whether state majority is liberal or conservative, the opportunities to increase tax revenues result in millions of dollars from pot sales filling a lot of potholes. 

Below, the top and bottom five states ranked by potential tax revenue per adult from legalizing marijuana sales. 

Top Five Revenue Producing States

STATETax Revenue
Potential Per
Adult
Total Annual
Potential
Revenue
Percent of
Adult Use
Prior 30 Days
Population 21
and older
Legal Status
Vermont$66.94$32 M22.3% (highest)478,059Fully Legal
Oregon$64.67$207 M22.1%3,200,622Fully Legal
Colorado$58.88$252 M20.5%4,279,893Fully Legal
Alaska$57.36$30 M19.8%523,018Fully Legal
Maine$56.21$59 M19.6%1,049,640Fully Legal

Looking at these top five states, the total potential revenue exceeds $530 million.

For perspective, in 2020, Colorado marijuana sales exceeded $2 billion dollars and is expected to continue to increase.

Bottom Five Revenue Producing States

STATETax Revenue
Potential
Per Adult
Total Annual
Potential
Revenue
Percent of
Adult Use
Prior 30 Days
Population 21
and older
Legal Status
Mississippi$23.93$51 M8.8%2,131,424Medical & Decriminalized
South Dakota$23.59$15 M8.8%635,739Legal*
Kansas$21.61$45 M8%2,082,728Fully Illegal
Utah$20.68$44 M7.6%2,127,694Medical Only
Texas$20.40$415 M7%20,340,329Medical Only
* Two measures were passed by voters with a 69.9% margin in favor for full legalization. However, the Governor and state legislatures are attempting to block full compliance despite voter’s desires. Recreational marijuana in South Dakota will not go into effect, pending a higher court’s decision

.The low revenue expectation for South Dakota is dependent on both total population and age of the population. As a popular tourist destination, the potential for higher revenue could easily increase revenue estimates.

Regardless of whether state majority is liberal or conservative, the opportunities to increase tax revenues result in millions of dollars from pot sales and that can fill a lot of potholes. 

Aspen Cannabis Insurance is in Denver, CO, and services clients nationwide. We are a family run business working with multiple insurance carriers to offer our customers the coverage they need at the lowest possible cost. We offer a wide range of personal, commercial, and professional insurance to residential and commercial customers enabling the cheapest rates available. Call to speak to one of our insurance professionals and see how painless insurance shopping can be.

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.

Menu