‘Green rush’: Legal weed is generating billions in tax revenue for states, new report claims

Ten US states where recreational marijuana is legal collected nearly $2.7billion in taxes on the drug last year, a new report claims

There’s a new “green rush” in America.

Ten states that have legalised the recreational use of marijuana for collected nearly $2.7billion in extra taxes last year, according to advocates.

The Marijuana Policy Project, which campaigns for greater legalisations of the drug, published a new report into weed-related tax revenues and claimed to have found that “legalizing marijuana for adults has been a wise investment”.

The report added: “Since 2014, when sales began in Colorado and Washington, legalization policies have provided states a new revenue stream to bolster budgets and fund important services and programs. 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.”

The recreational use of cannabis is legal in 17 states, with medical use with approval from a doctor legal in 36 states.

But the use of cannabis remains illegal on a federal level.

A food truck sits outside the Sunnyside Cannabis Dispensary as customers wait in line to buy marijuana, on January 1, 2020 in Chicago, Illinois. - On the first day of 2020, recreational marijuana became legal in Illinois, which joins 10 other US states with legal use of recreational marijuana. (AFP via Getty Images)

The report analysed each state’s tax laws, population size and estimated adult marijuana use, as well as additional revenues from legalisation, including local city taxes.

They found that sales of the product, including items like edibles, began to rocket following the outbreak of the pandemic last year when more adults were looking for recreational activities at home and more outlets were beginning to offer sales online.

The state with the largest marijuana market is California, which legalised recreational use in 2018 and collected $1bn in taxes on the product last year, an increase of 62-per-cent compared to 2019’s $397million.

Washington, which was one of the first states to legalise recreational use along with Colorado in 2014 and taxes marijuana products at 37-per-cent, collected $614 million; a higher amount than that imposed on alcohol in both the last two financial years.

Edible cannabis products are displayed at Essence Vegas Cannabis Dispensary before the midnight start of recreational marijuana sales on June 30, 2017 in Las Vegas, Nevada. (Getty Images)

In Oregon, tax revenues jumped from $68million in 2017 to $158million in 2020.

In Nevada, which has legalised use since 2017, revenue was $123million in 2020, compared with $86million in 2018.

In Colorado, budget officials counted $362 million in marijuana taxes in 2020, up from $279 million the year before.

Newer markets appear to replicate the trend.

Michigan raked in nearly $50million between January and April this year alone, compared to its annual 2020 revenue of $81.7million.

Multiple other states where revenue tax is not yet available are expected to report similar numbers, authors of the report claim, including Vermont, Arizona, New Jersey, Montana, South Dakota, New York, New Mexico and Virginia.

Following the 2020 election, four states, including New Jersey, Arizona, South Dakota and Montana, legalised use of the drug either recreationally or medically.

In March, New York became the 15th state to legalize recreational use.