January 29, 2023


H_Ko // Shutterstock

States with the highest cannabis tax revenues

Close up of a burning pack of marijuana for cash dollars.

The Drug Enforcement Agency has seen no reason to remove cannabis from its Schedule I list of prohibited substances. Yet cannabis, in its myriad forms, rakes in billions of dollars in vital tax revenue for 11 states where it’s legal to buy and use – $3 billion in 2022 alone.

The drug has been included in the Schedule I classification alongside heroin, peyote, and other substances the DEA believes have high abuse potential since 1970, when Congress enacted the Controlled Substances Act, making it federally illegal to possess it . Two decades after the law was passed, some states began making the drug available to residents, citing medical benefits and relative safety compared to other substances, after intense social pressure leading to the realization of a new tax option.

While the negative health effects of marijuana, such as the potential to inhale harmful carcinogens when smoked, have been documented, there have never been confirmed fatal overdoses resulting from the use of marijuana alone. With cannabis becoming more available (not to mention popular), the Biden administration passed landmark legislation in December 2022 that allowed the federal government to study its effects on a larger scale for the first time.

The first state to legalize the use of marijuana in a medical capacity was California, which did so in 1996. Today, marijuana is legal for medical use in 38 states and four territories, including Guam and the Virgin Islands, according to nonprofit NORML, which works to legalize and regulate marijuana on a par with alcohol.

In recent years, more and more states have taken steps to legalize and regulate the sale, or at least decriminalize the use of cannabis. In 2022, five states voted on recreational cannabis use, with two — Maryland and Missouri — approving such measures. The taxes collected by cannabis and cannabis-related sales benefits programs and government institutions, including education systems, correctional facilities, fire departments, and transportation initiatives.

Stacker used data from the Urban Institute to rank states by the proportion of 2022 tax revenue they collected through excise taxes on recreational cannabis, breaking the link to total cannabis tax revenue. Data is limited to the 11 states that levied a cannabis use tax from July 2021 through June 2022. An excise tax is paid at the point of sale on a manufactured good, such as a vegetable by-product. There are three ways cannabis products can be taxed: by a standard percentage of price, by weight, and by the relative potency of the product.

Technically, collecting cannabis taxes is still illegal under federal law, but 19 states have enacted cannabis tax laws as of September 2022. Connecticut, New York, Rhode Island, Vermont and Virginia have passed laws imposing cannabis taxes, but at the time of data collection, sale was not yet legal. Washington DC allows the legal sale of cannabis, but Congress prevents it from levying taxes on legal sales. Minnesota allows the purchase of some THC-infused products, but does not collect a cannabis tax.

You may also like… States where food stamps are most commonly used



Federico Magonio // Shutterstock

#11. Maine

Glass jar full of Cannabis Sativa for sale at a market stall.

– Share of tax revenue from cannabis excise taxes: 0.3%
– Revenue from the Statewide Cannabis Excise Tax: $18.2 million
— Per capita: $13

Maine legalized the recreational use of cannabis for adults 21 and older in 2016. However, cannabis sales only started in October 2018 and taxation only increased in November 2020.



Joe Seher // Shutterstock

#10. California

Cannabis products at the opening of a cannabis dispensary.

– Share of tax revenue from cannabis excise taxes: 0.3%
– Revenue from the Statewide Cannabis Excise Tax: $774.4 million
— Per head: $20

California, forever the first state to delve into the wild world of cannabis legalization, earned more in cannabis sales taxes in 2022 than any other state. One reason is that despite repealing a weight-based tax, the state charges a 15% consumption tax, and some local governments also charge a gross receipts tax, which often passes to the individual buyer.



arindambanerjee // Shutterstock

#9. Massachusetts

Customers discuss cannabis during a cannabis fair.

– Share of tax revenue from cannabis excise taxes: 0.4%
– Revenue from the Statewide Cannabis Excise Tax: $156.7 million
— Per capita: $22

The state of Massachusetts last year became the first state to add classes on marijuana-impaired driving to its novice driver’s license curriculum. The state passed reforms to its marijuana laws in 2022 that will put 15% of marijuana excise taxes into a fund to support diversity in the marijuana retail industry, which is dominated by white males.



Konektus photo // Shutterstock

#8th. Michigan

Pharmacy sign on the building.

– Share of tax revenue from cannabis excise taxes: 0.4%
– Revenue from the Statewide Cannabis Excise Tax: $163.5 million
— Per capita: $16

In November 2018, Michigan became the first Midwestern state to legalize both medical and recreational marijuana use. The state sends millions of taxpayer dollars from drug sales to its public schools and public transportation sector.



420MediaCo // Shutterstock

#7. Arizona

Close up of hands wrapping cannabis.

– Share of tax revenue from cannabis excise taxes: 0.6%
– Revenue from the Statewide Cannabis Excise Tax: $132.8 million
— Per capita: $18

In March 2022 alone, marijuana sales generated more tax revenue for Arizona than tobacco and alcohol sales combined. These taxes help fund public schools. The state also passed legislation allowing people with marijuana charges to have them deleted starting in 2021.

You may also like… Experts choose the best US presidents of all time



Federico Magonio // Shutterstock

#6. Illinois

Several varieties of Cannabis Sativa, in glass vials, for sale at a market stall..

– Share of tax revenue from cannabis excise taxes: 0.8%
– Revenue from the Statewide Cannabis Excise Tax: $466.8 million
— Per capita: $37

As of early 2020, anyone 21 years of age or older can purchase recreational cannabis in Illinois. Tax revenues fund housing and mental health welfare programs. The state levies gross receipts and potency taxes.



Wirestock Creators // Shutterstock

#5. Oregon

Cannabis Dispensary in Bend, Oregon.

– Share of tax revenue from cannabis excise taxes: 1.0%
– Revenue from the Statewide Cannabis Excise Tax: $170.6 million
— Per head: $40

In Oregon, marijuana sales tax revenue goes to a number of places, including police budgets, local governments, and healthcare systems. The largest part – 40% – goes into the state school fund.



Jay Juno // Shutterstock

#4. Alaska

The interior of the Tundra Herb Company, a dispensary in Anchorage.

– Share of tax revenue from cannabis excise taxes: 1.2%
– Revenue from the Statewide Cannabis Excise Tax: $28.9 million
— Per capita: $39

More than 3% of all taxes collected in Alaska in 2021 came from marijuana sales. While that number fell the following year, taxpayers’ money still benefited drug treatment programs and initiatives to keep those formerly incarcerated from going back to prison.



Canna Obscura // Shutterstock

#3. Washington

Commercial cannabis plants grow.

– Share of tax revenue from cannabis excise taxes: 1.5%
– Revenue from the Statewide Cannabis Excise Tax: $517.0 million
— Per capita: $67

Washington state has enjoyed legal recreational marijuana for nearly a full decade. This taxpayer money funds health care, state police, and local government budgets.



Adam Melnyk // Shutterstock

#2. Nevada

A cannabis dispensary sign with a large marijuana leaf on it.

– Share of tax revenue from cannabis excise taxes: 1.7%
– Revenue from the Statewide Cannabis Excise Tax: $152.3 million
— Per capita: $48

In 2019, Nevada passed legislation allocating all marijuana tax revenues to public education. The state still prevents the sale and consumption of marijuana at major events.

You may also like… Former jobs of all Supreme Court justices



H_Ko // Shutterstock

#1. Colorado

Courier hands over package with marijuana to customer close-up.

– Share of tax revenue from cannabis excise taxes: 1.7%
– Revenue from the Statewide Cannabis Excise Tax: $353.7 million
— Per capita: $61

Colorado is winning ahead of all other states and collects the largest portion of its taxes from marijuana excise taxes. Tax revenues go to housing, mental health care, rehabilitation of older school buildings, and other social programs.


Leave a Reply

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