How Much Every State Can Make From Legalized Marijuana

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Marijuana is big business. Millions of users spend billions of dollars on it every year. As it becomes legalized in more and more states — some 15 currently permit its personal purchase, possession, and use, with at least two more scheduled to join them this summer — those states will want a share of the revenue. (As of now, these are the 15 states where marijuana is legal.)

How much do they stand to realize? 24/7 Wall St. ranked all 50 states based on how much excise tax revenue they can potentially generate from legalized marijuana sales. 

The numbers of people smoking and thus the profits state governments might see vary considerably from place to place. The Tax Foundation estimates that more than 22% of adults in Vermont, for instance, used marijuana in a recent 30-day period, but there are fewer than 500,000 people in the state. In contrast, the figure for Texas is only 7%, but the state has a population of more than 20 million adults, which means a lot more money going up in smoke.

Potential revenues, likewise, span a wide range. Wyoming, which has a tiny population and a relatively low level of marijuana use, might see $11 million annually, while California, the most populous state and one whose consumption is above average, could bring in $1.2 billion. 

Whether it’s legal or not, people will still use marijuana. And whether liberal or conservative, states don’t like to miss out on potential tax revenues. (These are America’s richest and poorest states.)

Those millions of dollars from pot sales could fill a lot of potholes. 

To determine how much excise tax revenue each state can generate from legalized marijuana sales, 24/7 Wall St. reviewed 2020 data from the nonprofit Tax Foundation. Potential total tax revenue was based on the average taxes paid per marijuana user in states that have had a legalized market for a minimum of three years, such as Colorado and Washington. Potential revenue per adult was calculated using that figure and 2019 population estimates for adults over 21 years old from the U.S. Census Bureau’s 2019 American Community Survey. 

The percentage of adults that have used marijuana in the 30 days surveyed also came from the Tax Foundation and was based on data for 2017 and 2018 from the National Survey on Drug Use and Health, published in the 2019 annual report from the Substance Abuse and Mental Health Services Administration.

The legality of recreational and medical marijuana in each state was determined by reviewing the legalization page on the website for The National Organization for the Reform of Marijuana Laws, accessed on April 13th, 2021.

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