It’s been seven years since Colorado and Washington legalized marijuana for adult recreational use. Since that time, several more states have followed suit. Today, there are 10 states and the District of Columbia that have legalized marijuana. Of those jurisdictions, seven have established legal markets for the drug and are collecting taxes on cultivators, buyers, or both. The remaining states have not yet established a market framework, while the District is prohibited by federal law from collecting tax on marijuana sales.
So how much revenue has the marijuana industry produced for the states where it’s legal? A lot. This year, Colorado announced that it passed the $1 billion mark since it began collecting taxes, licenses, and fees in 2014. In that same period, total marijuana sales in the state exceeded $6.5 billion.[1] Though nowhere near enough to balance the budget, those figures aren’t exactly chump change. In 2018 Colorado collected $266 million in revenue, and has collected over $111 million thus far in 2019.[2] Washington, which like Colorado began collecting tax in 2014, passed the $1 billion mark in fiscal 2017.[3] In 2019 the Washington state revenue agency reported it had collected over $367 million from income and excise taxes and license fees in fiscal 2018.[4] California legalized recreational marijuana in 2018 and in one year generated $345 million in tax revenues. 2018 marijuana tax revenues brought in $94.4 million to Oregon, $69.8 million to Nevada, and $10.8 million to Alaska.[5] Massachusetts, which only legalized recreational marijuana in November 2018, pulled in $5.2 million in taxes within two months.[6]
Not only does marijuana legalization generate revenue for the states, it provides a boom in jobs as well. The federal Bureau of Labor Statistics doesn’t count or report job gains in the marijuana industry because it’s still illegal under federal law, but states and private research firms are perfectly capable of making their own findings. According to Leafly, a marijuana research website, the industry today employs more than 211,000 full-time workers, and if one adds indirect and other marijuana-related jobs, that number swells to 296,000.[7] Leafly’s research shows California is expected to add more than 10,000 cannabis industry jobs this year, and Florida is expected to add 9,500.[8] Colorado reports almost 3,000 licensed marijuana businesses in the state as of 2019, and roughly 41,000 state residents are licensed to work in the marijuana industry.[9] Indeed, Leafly points out that in the United States, there are more legal cannabis workers than dental hygienists.[10]
On what do states spend their marijuana millions? A substantial portion is deposited into the general fund. Beyond that, state spending varies, but the most common outlays are for education, drug abuse treatment programs, and medical research. Washington deposited nearly half of its collected marijuana revenue into its basic health plan trust account, which subsidizes basic healthcare for working people and others who lack coverage.[11] In Colorado, marijuana revenue contributed $125 million to funding for public schools and $17.2 million to local governments.[12] Colorado’s local jurisdictions have also put their distributions to good use: Aurora used its $900,000 portion to develop a homeless resource center that gives the homeless a place to go during the day and provides access to basic services,[13] and Pueblo has used its distribution to fund scholarships for underprivileged students.[14]
For the states that have done so, it seems marijuana legalization for adult recreational use has them in good stead. The revenues generated may not make a huge difference in a state’s budget, but it does make a difference. The jobs the marijuana industry has created have also contributed to the economic health of the various states. Given the tangible benefits the marijuana industry has bestowed on states where it’s been legalized, other states that haven’t taken that step might want to give the possibility further consideration.
[1] Leandra Bernstein, “Colorado Made $1B in Marijuana Tax Revenue: What Could This Mean for Federal Legalization?” WJLA, June 13, 2019.
[2] Jean Lotus, “States Reap Tax Rewards From Legalized Marijuana Sales,” UPI, June 14, 2019.
[3] Maritza Perez, Olugbenga Ajilore, and Ed Chung, “Using Marijuana Revenue to Create Jobs,” Center for American Progress, May 20, 2019.
[4] “Washington Marijuana Revenues, and Health,” Washington State Treasurer, 2019.
[5] See supra note 2.
[6] Id.
[7] Bruce Barcott, Beau Whitney, “Special Report: Cannabis Jobs Count,” Leafly (2019).
[8] Id.
[9] See supra note 2.
[10] See supra note 7.
[11] See supra note 4.
[12] See supra note 1.
[13] Niall McCarthy, “Which States Made the Most Tax Revenue From Marijuana in 2018?” Forbes, Mar. 26, 2019.
[14] Id.