Marijuana Tax Revenue By State Statistics [2023]

Marijuana tax revenue research summary. Marijuana has been legalized in many states across the US, for medical and recreational purposes. The once-illegal substance has become a profitable venture for these states, as they collect significant tax revenues from sales. To learn more about marijuana tax revenue by state, here are some insights our research uncovered:

• States with legal marijuana have collected $15 billion in tax revenue between 2014-2022.

• $3.77 billion in tax revenue was collected from marijuana sales in 2022.

• Marijuana tax revenue declined by 2.6% between 2021-2022.

For further analysis, we broke down the data in the following ways: Potential Tax Revenue | Tax Revenue | Per Capita | Types of Taxes | Over Time

Marijuana tax revenue over time

Marijuana Tax Revenue Statistics by Tax and Non-Tax States

Of the states that have legalized marijuana, only some have decided not to tax the substance. To explore the 50 states by who taxes marijuana and who doesn’t, here are some insights our research uncovered:

Tax vs. non-tax legal marijuana states

• Marijuana is legal and taxed in 19 states.

  Of the 19 states where marijuana is legal and taxed, the three states that have the highest share of tax revenue from Marijuana are Colorado (1.7%), Nevada (1.7%), and Washington (1.5%).

• Marijuana is legal and not taxed in only 4 states.

  Many states use legal marijuana as an opportunity to increase tax revenue, but Delaware, Maryland, Minnesota, and Virginia have decided not to tax the substance.

• Marijuana is still illegal in 27 states.

  The majority of US states still have not legalized marijuana. These states include:

  Alabama Arkansas Florida Georgia Hawaii Idaho Indiana Iowa Kansas	Kentucky Louisiana Mississippi Nebraska New Hampshire North Carolina North Dakota Ohio Oklahoma	Pennsylvania South Carolina South Dakota Tennessee Texas Utah West Virginia Wisconsin Wyoming

Marijuana Tax Revenue Statistics by Potential Tax Revenue

States with legal marijuana have already seen impressive tax revenue, but this could also be achieved by the states that have yet to legalize the substance. Here are some interesting facts about potential revenues for each state:

Potential marijuana tax revenue by state (for a minimum of three years)

• The state that stands to earn the most potential tax revenue from marijuana is California, at $1.086 billion.

  California has already legalized marijuana, and for good reason. With the largest population in the US, California can rake in massive profits from marijuana taxes. In second and third place are Florida and New York.

• Marijuana is illegal in Florida, but the state could gain $448.74 million in marijuana taxes.

  Other states that could gain a lot from legalizing marijuana are Texas and Pennsylvania, which could earn $397.42M and $244.55M from marijuana taxes, respectively.

• The state that stands to gain the least from marijuana taxes is Wyoming, at only $10.05 million.

  States with small populations are less likely to make high profits off marijuana taxes. Other states that fall in this category are North Dakota and South Dakota.

Marijuana Tax Revenue Earned in 2022

Marijuana tax revenue earned in 2022 was significant for the states with legalized marijuana. Here are the numbers:

Marijuana tax revenue by state (2022)

• California earned the most tax revenue from marijuana in 2022, at $1.074 billion.

  Others among the top 5 states with the highest marijuana tax revenues include Illinois ($562.12M), Washington ($529.44M), Michigan ($326.05M), and Colorado ($305.03M).

• Rhode Island earned the least from marijuana taxes, at only $579,439

  However, Rhode Island is also one of the more recent states to legalize marijuana, doing so on May 25, 2022. This means that Rhode Island’s 2023 tax revenue will likely be much higher.

Marijuana Tax Revenue Statistics by Tax Revenue Per Capita

Marijuana tax revenue per capita helps show which state makes the most revenue off marijuana taxes per person, rather than just by total population. Here is a comprehensive chart outlining state revenue per capita:

Marijuana tax revenue per capita by state

• Washington state has the highest per capita marijuana tax revenue of $67.

  $67 per person is an impressive tax revenue for marijuana, but Colorado also comes in at a close second at $61 per person.

• Maine makes the least per capita from marijuana taxes, at only $13.

  Maine is one of the three marijuana tax states that make less than $20 per capita from marijuana taxes. The other two states include Michigan ($16) and Arizona ($18).

Marijuana Tax Revenue Statistics by Types of Taxes

Marijuana taxes can be different in each state for many reasons. For example, some states may have general state taxes at the state level, but not the local level, or choose to implement a weight-based tax for marijuana. Here are the differences between the states outlined:

Type of marijuana taxes by state

• 17 states have state percentage-of-price taxes.

  This is the most common type of marijuana tax, while 12 states have local percentage-of-price taxes. Interestingly, California, Illinois, Massachusetts, Missouri, Montana, New York, Oregon, Rhode Island, and Virginia have all opted to have both.

• Only 5 states have weight-based marijuana taxes.

  There are a few states that have chosen to tax marijuana differently depending on its weight. These states are Alaska, Colorado, Maine, Nevada, and New Jersey.

• Only 3 states have potency-based marijuana taxes.

  Some states decided to tax marijuana based on its potency. These states are Connecticut, Illinois, and New York.

• 14 states have state general sales taxes for marijuana

  While 11 states have local general sales taxes for marijuana. States with both state and general sales taxes for marijuana include Arizona, California, Illinois, Missouri, Nevada, New Mexico, Vermont, Virginia, and Washington.

Marijuana Tax Revenue Statistics by Tax Revenue Over Time

Marijuana was legalized in some states far earlier than others, which has given those states extra time to accrue more marijuana tax revenue. With that in mind, here is the total revenue accumulated by states over time:

Marijuana tax revenue by state over time

• California has made the most from marijuana taxes since legalization at $4.660 billion.

  Though California wasn’t the first to legalize marijuana, the state has made the most from marijuana taxes over time. Colorado was the first state to legalize marijuana but has only made the 3rd largest profit after California and Washington.

• Despite only just legalizing marijuana in 2022, Montana has already made $45.73 million from taxes.

  This is especially impressive given Montana’s small population. Rhode Island also legalized marijuana in 2022 but has only seen around half a million in tax revenue.

Marijuana tax revenue FAQ

1. Which state makes the most money from marijuana?

   California makes the most money off marijuana, at $1.074 billion in 2022 and $4.660 billion since legalization. This is a few billion more than even the other top states, which can partially be explained by California’s massive population and high marijuana taxes.

   However, per capita, California actually only makes around $20 per person in marijuana taxes. Under this metric, Washington and Colorado make far more at $67 and $61, respectively.

2. How much do states make from marijuana taxes?

   States make an average of anywhere between a few million to up to a billion in marijuana taxes per year. On the smaller end, states like Alaska, Maine, Montana, New Jersey, New Mexico, and Vermont all made less than $100 million from marijuana taxes in 2022. While, on the larger end, California, Illinois, and Washington all made over $500 million.

   Over time, some states have made more from marijuana because they either have larger populations or legalized the substance sooner. For instance, Colorado legalized marijuana in 2014 and has made over $2 billion in revenue since then. Conversely, Rhode Island just legalized marijuana in 2022 and has only made $579,439.

3. Where does marijuana tax money go?

   Marijuana taxes generally go to a state’s designated fund. From there, states can opt to spend the taxes on a variety of things, the most common of which include:

   • Health care

   • Education

   • Substance abuse prevention

   • Treatment programs

   • Law enforcement

   • Veterans programs

   • Transportation

   • Social services

   • Natural resource management programs

   Each state generally chooses to prioritize different things. For example, California’s considerable marijuana tax revenue mainly covers transportation, education, and social services. While, on the other hand, Missouri’s revenue mainly goes toward public defenders, drug addiction treatment, and veterans.

4. Do marijuana growers pay federal taxes?

   Yes, marijuana growers pay federal taxes. Even though marijuana is still illegal on the federal level, marijuana growers are still required by law to pay federal income tax on sales from their dispensaries.

   In this way, marijuana as a source of income is taxed the same as any other source of income at the federal level.

5. How much money would the US make if marijuana was legal?

   If marijuana was legal nationwide, the US would make $132 billion in tax revenue. Not only is this much higher than the over $10 billion made from alcohol annually in the US, but it would also generate over a million jobs over the next decade.

Conclusion

Marijuana tax revenue is at an all-time high of $15 billion in the US, and will only keep growing as more states continue to legalize the substance.

Of the states with legal marijuana, California makes the most from tax revenue by far, at $1.074 billion in 2022 and $4.660 billion since legalization. Colorado and Washington make the most per capita, at $67 and $61, respectively, but still don’t match California’s numbers.

Going forward, states like Florida, Texas, and Pennsylvania could stand to gain the most from marijuana taxes. But whether or not they choose to legalize the substance remains to be seen.

References

1. Marijuana Moment – States Have Generated Over $15 Billion In Marijuana Tax Revenue Since 2014, Though Earnings Declined Last Year, Report Finds

2. Urban Institution – Cannabis Taxes

3. Tax Foundation – Several States Considering Legal Recreational Marijuana

4. The Motley Fool – Marijuana Tax Revenue: A State-by-State Breakdown

Author

Jack Flynn

Jack Flynn is a writer for Zippia. In his professional career he’s written over 100 research papers, articles and blog posts. Some of his most popular published works include his writing about economic terms and research into job classifications. Jack received his BS from Hampshire College.