But, this begs the question, which states have earned the most in cannabis tax revenue? You’d be surprised to learn that a few states have topped a billion! Do note that cannabis is legal for both medical and recreational use in these states, which is part of the reason they’ve been able to use the income to put together such strong and useful programs. Could other states stand to see the same success that cannabis taxes are offering to states that have legalized? Let’s take a look at some of the numbers and see which states are performing the best when it comes to tax revenue.
Washington Makes Bank in Cannabis Tax Revenue
Washington is the standard-bearer when it comes to cannabis tax revenue. The state legalized adult-use cannabis in 2012, and sales began in 2014. They began by charging a 25% tax rate before eventually increasing that rate to 37%. For the past four years, Washington has reliably earned more than $400 million in cannabis tax revenue, and as of 2020, its combined total since legalizing in 2012 is over $2 billion. States wondering whether they have the opportunity to earn money with a legalized cannabis program have only to look at Washington’s success to see their answer.
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Colorado Sees Over $1.3B
Like Washington, Colorado legalized early—in 2012, with sales formally beginning in 2014. Unlike Washington, however, Colorado had a medical cannabis program firmly in place when recreational cannabis sales began. Early on, Colorado was taking in considerably more in tax revenue than Washington was. That shifted, however, as Washington found their footing, primarily because of Colorado’s lower tax rates. Although Colorado is well known as one of the very first adopters of legalized cannabis, they bring in less in tax revenue than Washington does—just under $300 million in 2020. However, it’s nothing to sneeze at—their combined revenue since legalizing is still over $1.3 billion.
California’s Numbers are Astounding
California is a special case. The first adult-use stores in the state didn’t open until 2018, so unlike Washington and Colorado, they’ve only got three years of tax revenue on the books. But the numbers are absolutely huge. In 2020, the state brought in almost $800 million in tax revenue. And with only three years of sales, their total is already higher than Colorado’s, at $1.8 billion combined since legalization. Of course, if one thinks about this, the reason is obvious. California’s population is more than five times that of Colorado. So it’s not fair to compare the two of them directly.
But states like Texas, which are closer to California in size, should be taking a hard look at these numbers. Texas hasn’t yet legalized recreational cannabis and its medical program is severely lacking, but seeing how much California was able to boost its economy in just one year has got to be intriguing. Hopefully, we’ll see the success these states are having to encourage other states to legalize and tap the resource of cannabis tax revenue for themselves.
Kat Helgeson comes from a ten year career in social media marketing and content creation. She takes pride in her ability to communicate the culture and values of an organization via the written word. Kat is also the author of numerous books for young adults. Her titles have received the Junior Library Guild Award, the Bank Street College of Education Best Books of the Year Distinction, and been featured on the Illinois Reads selection list. Her work has been translated into Dutch and German.
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The statements made regarding cannabis products on this website have not been evaluated by the Food and Drug Administration (FDA). Cannabis is not an FDA-approved substance and is still illegal under federal law. The information provided on this website is intended for educational purposes only and is not intended to diagnose, treat, cure, or prevent any disease. It is not intended as medical advice and should not be considered as a substitute for advice from a healthcare professional. We strongly recommend that you consult with a physician or other qualified healthcare provider before using any cannabis products. The use of any information provided on this website is solely at your own risk.