Since Colorado and Washington took the historic step of legalizing recreational cannabis in 2014, the marijuana industry has rapidly expanded, with tax revenue emerging as one of the most significant financial outcomes.
The growing legal cannabis market across the U.S. has generated billions of dollars in tax revenue, benefitting state budgets, funding essential services and providing economic boosts in both mature and newly legal markets. According to the latest figures compiled by Lyle Daly for The Motley Fool, based on official websites and the Tax Foundation, states that have not yet legalized are missing out on nearly $5 billion in tax revenue.
Cannabis Tax Leaders
In 2023, California raked in over $1.08 billion in cannabis tax revenue – a number that underscores the scale of the state’s weed market. Other states, like Illinois and Washington also collected hundreds of millions in tax revenue. The table below outlines cannabis tax revenue collected by each state in their most recent fiscal or calendar year and considering all cannabis markets.
Order State Revenue
1 California 1.089.898.823,00
2 Washington 464.496.959,00
3 Illinois 451.868.765,00
4 Michigan 290.300.000,00
5 Arizona 289.879.253,00
6 Colorado 274.121.043,00
7 Massachusetts 272.445.292,00
8 Oregon 150.898.047,00
9 Nevada 120.537.308,00
10 Missouri 74.254.000,00
11 Montana 54.075.570,00
12 New York 50.760.000,00
13 New Mexico 47.243.651,00
14 New Jersey 41.889.891,00
15 Maine 35.593.347,00
16 Maryland 29.880.000,00
17 Alaska 29.477.517,00
18 Connecticut 24.613.366,00
19 Rhode Island 17.203.256,00
20 Vermont 15.210.000,00
States Still Leaving Revenue On the Table
Despite the rapid spread of cannabis legalization, many states have yet to tap into the potential revenue, leaving millions to illicit markets.
According to estimates from the Tax Foundation, states that have not yet legalized cannabis could be losing out on billions of dollars in tax revenue.
The table below highlights the projected cannabis tax revenue for these states if they were to legalize cannabis in the near future.
As you can see, Florida has left a massive amount of tax revenue after Amendment 3 failed garner the necessary 60% of the vote to enact an amendment.
Overall, the leader is Texas, the second largest economy in the U.S. after California.
Order State Revenue
1 Texas 492.056.337,00
2 Florida 454.981.259,00
3 Pennsylvania 315.223.591,00
4 Georgia 250.470.344,00
5 Virginia 211.857.590,00
6 North Carolina 197.164.241,00
7 Indiana 172.219.718,00
8 Tennessee 155.646.987,00
9 Minnesota 143.003.873,00
10 Wisconsin 133.094.405,00
11 Oklahoma 128.481.377,00
12 Louisiana 116.350.821,00
13 South Carolina 110.883.529,00
14 Kentucky 92.260.563,00
15 Alabama 86.622.418,00
16 Iowa 83.888.771,00
17 Kansas 74.833.568,00
18 Arkansas 63.215.571,00
19 Mississippi 60.481.925,00
20 Utah 58.260.837,00
21 West Virginia 41.175.548,00
22 Idaho 38.783.607,00
23 Nebraska 37.245.931,00
24 New Hampshire 36.733.372,00
25 Hawaii 28.361.581,00
26 Delaware 26.482.199,00
27 North Dakota 16.743.584,00
28 South Dakota 16.060.172,00
29 Wyoming 13.668.232,00
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Long-Term Potential
Looking ahead, states that have legalized marijuana will continue to see tax revenue grow as markets mature and demand stabilizes.
Early adopters have already seen billions in revenue, while newer markets like Michigan and Illinois are catching up quickly.
As more states legalize cannabis, especially in the wake of budget deficits and increased pressure on public services, marijuana tax revenue could play a critical role in financing key state priorities, from education to infrastructure.
States still hesitant about legalization should consider the economic benefits already realized by their peers. As the data shows, legal cannabis is not just a societal shift but a financial one, with states that embrace it reaping significant rewards.
H?T: www.benzinga.com
