Adult-Use Cannabis States Collect $2.7B in Tax Revenue in 2020

Cannabis is taxed at a higher rate than other goods. But the silver lining is that many states are raking in the dough as cannabis tax revenue piles up.

According to a new report from the Marijuana Policy Project, since the first states to launch adult-use cannabis began, states with adult-use cannabis collected nearly eight billion dollars in tax revenue. As cannabis was deemed essential in many places, 2020 was a hallmark year for cannabis sales, earning  $2.7 billion in tax revenue.

The report, entitled “Marijuana Tax Revenue in States that Regulate Marijuana for Adult Use,” added up revenue reports going back to 2014. Eighteen states passed laws that legalize and tax cannabis for adults ages 21 and older—but since eight of the laws passed recently in 2020 or 2021, ten states were tallied for the report.

“As of May 2021, states reported a combined total of $7.9 billion in tax revenue from legal, adult-use marijuana sales. In addition to revenue generated for statewide budgets, cities and towns have also generated hundreds of thousands of dollars in new revenue from local adult-use cannabis taxes.”

California collected more than $1 billion in adult-use cannabis taxes in 2020, as reported by the state Department of Finance, up 62 percent over 2019. Washington collected $614 million in cannabis tax revenue last year. In Colorado, officials collected $362 million in cannabis tax revenue in 2020, up from $279 million the year before. Oregon collected $158 million in pot taxes, and Nevada collected $123 million. 

Illinois and Michigan also reported similar numbers. States on the East Coast are also moving up the ladder. Massachusetts, for instance, collected $118 million in taxes in 2020.

As far as state officials are concerned, the high tax rates are paying off. In California, for instance, this handy budget and policy guide shows how cannabis tax rates stack up compared to cigarettes, alcohol and other goods.


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