New Federal Data Shows States Collected More Than $8.7 Billion In Marijuana Taxes Since 2021

States that have legalized marijuana have reported to the federal government more than $8.7 billion in cannabis tax revenue since tracking began by the U.S. Census Bureau in mid-2021, according to newly updated figures posted by the agency on Thursday.

Overall, California has reported the biggest share of that revenue, at more than $2 billion in tax income, followed by Washington State ($1.3 billion), Colorado ($898 million) and Michigan ($698 million).

The latest update by the Census Bureau to its cannabis excise sales tax tracker includes data through the second quarter of 2024, although not all states—including Washington, Nevada, Maryland, New Mexico, New Jersey and Arkansas—had yet submitted data for the latest quarter.

Because the numbers are incomplete, Census advises that they “should not be relied upon to estimate the total cannabis sales tax collected for the U.S.”—meaning the $8.7 billion total is likely an undercount of actual taxes taken in.

Among states that did provide numbers for the latest quarter, California collected $156 million in cannabis taxes during that period, followed by Michigan ($75 million), Illinois ($72 million), Colorado ($61 million), Massachusetts ($50 million) and Arizona ($45 million).

Jurisdictions reporting the lowest revenue figures were those where only medical marijuana sales are legal, including Louisiana ($298,000), Mississippi ($363,000) and Washington, D.C. ($391,000).

The Census tracker—what the bureau has described since its introduction last year as an “experimental data product”—also displays cannabis taxes collected by each state as a portion of that state’s total tax revenue. For the most recent quarter, for example, Alaska’s cannabis tax represented 1.27 percent of its total tax revenue, the most among all states. Colorado was second, at 1.21 percent, followed by Oregon (0.89 percent), Montana (0.78 percent) and Michigan (0.76 percent).

While the revenue is a small fraction of overall state tax revenues, the dollars flowing into state coffers represent an outsized contribution from the sale of a single crop.

In terms of changes since the previous quarter, New York reported the biggest jump from Q1 of this year, climbing 40.68 percent—not unsurprising given the state is still actively working to expand its fledgling market by getting more dispensaries open.

Other states that saw increases over the previous quarter were Massachusetts (up 21.22 percent), Alaska (15.13 percent) and Connecticut (10.95 percent).

Among states that saw declines from the quarter before, revenues fell 24.80 percent in Rhode Island, 23.63 percent in Washington, D.C., 10.23 percent in Missouri and 3.75 percent in Michigan.

Notably, in addition to reporting by states being incomplete, the Census tracker’s numbers lag behind the real-time market.

The agency says figures shown are “based on a calendar quarter and generally represent taxes collected on sales made during the prior quarter (i.e. data released in September 2023 will cover sales during the quarter ended June 30, 2023).”

While not every state with legal marijuana has consistently provided data for the Census Bureau’s map, the project nevertheless represents the federal government’s growing effort to account for the size and scope of the cannabis industry—which despite the growing number of state legalization laws remains federally illegal.

Last year, before the launch of the interactive map, the agency published a report showing that legal cannabis states had collected more than $5.7 billion in marijuana tax revenue over an 18-month period. Earlier that year, it also updated its survey of private businesses to better capture marijuana-related economic activity.

Together, the new tracking and reporting efforts—which come nearly a decade after the first state-legal sales of adult-use cannabis in the United States—indicate an increasing willingness by the federal government to acknowledge the billions of dollars in annual economic activity generated by an industry that it continues to prohibit.

The new state tax revenue data used to build the infographics “result from a complete canvass of all state government agencies,” the bureau said in a note last year about its survey methodology. While it refers to the revenue as “quarterly cannabis excise sales tax collections,” it also says that “taxes” are defined rather broadly.

“For this dataset, the concept of ‘taxes’ is comprised of all compulsory contributions exacted by a government for public purposes,” Census said. “Tax revenue is further defined to include related penalty and interest receipts of a government but to exclude protested amounts.”

The bureau has two separate tax codes for marijuana revenue that it asks states to report, one for taxes on cannabis transactions and another for business license fees.

The agency has said its own figures might not align perfectly with state-reported data “because the Census Bureau may be using a different definition of which organizations are covered by the term, ‘state government.’” The bureau’s definition, it explains, “refers not only to the executive, legislative, and judicial branches of a given state, but it also includes agencies, institutions, commissions, and public authorities.”

The updated Census data comes as a number of legal-marijuana states—Connecticut, Maine, Maryland, Michigan, Missouri and New York—are reporting record-setting cannabis sales for August, led by surging summer purchases of adult-use products.

The surge in sales across multiple U.S. states comes about half a year after the last broad boost to retail sales, which was seen in several states last December, including in Connecticut, Illinois, Maryland, Massachusetts, Michigan, Missouri, New Mexico and Rhode Island.

A separate industry report, meanwhile, based on data compiled by the cannabis intelligence firm Headset, suggests American marijuana consumers have spent more than $4.1 billion on pre-rolled joints over the past year and a half, with the products now making up about 15.9 percent of the cannabis market.

Separate reporting from Headset analyzed public comments related to the federal government’s planned rescheduling of marijuana. It found that approximately 35 percent of comments submitted to the Drug Enforcement Administration (DEA) agreed with the Biden administration plan, but most—57 percent—said cannabis should be entirely descheduled.

“These numbers paint a clear picture: over 9 out of 10 individuals who took the time to comment believe that cannabis should not remain a Schedule I substance,” Headset said at the time. “Moreover, the majority of commenters went beyond the proposed rescheduling to Schedule III, arguing for complete removal from the controlled substances list.”

As adult-use marijuana sales launched in Ohio last month, meanwhile, sales reached $22.5 million in the first 11 days, with projections indicating the state is on track to surpass $1 billion in combined medical and adult-use marijuana sales within the first year of the recreational market implementation.

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