In a growing number of cities and states throughout the U.S., the sale of cannabis for medicinal and recreational use is now legal. In 31 states, as well as the District of Columbia, Puerto Rico and Guam, people can purchase and use cannabis with a doctor’s recommendation. In 9 states, Washington, Vermont, California, Alaska, Oregon, Vermont, Maine, Massachusetts and Colorado, purchasing cannabis for recreational use is legal. This has been a boon to the economy in those regions with state and local governments enjoying a tax windfall that totals hundreds of millions of dollars.
A Tax Bonanza
States that have legalized the sale of cannabis are enjoying a tax bonanza. Reports estimate as much as $1.4 billion has gone into state coffers from cannabis specific taxes. In the first six months after Nevada legalized recreational cannabis use, it took in over $30 million in cannabis tax revenue. Colorado collected over $100 million in tax dollars from cannabis when it legalized recreational use in 2016 and averages over $140 million annually since. Alaska, which taxes its 116 cultivators, has collected about $11 million so far in 2018 in cannabis tax revenue. In the first quarter of 2018 alone, California’s cannabis brought in tax revenue in excess of $60.9 million. Massachusetts estimates its cannabis tax will generate between $44 and $82 million annually. Oregon’s tax on cannabis brings in $20 million a quarter. In Washington state, the cannabis tax haul last year was $70 million.
Direct And Indirect Income
While the bulk of the tax income is generated from cannabis sales, another way cannabis produces tax income for state and local governments is through job creation. The cannabis industry employs thousands of workers in each state and each of these workers has to pay income tax. That’s another consistent tax source from which state and local governments benefit. Add the taxes paid by growers and the owners of cannabis shops and dispensaries and it’s easy to see how the cannabis industry is a growing sources of much needed tax revenue for local, city and state governments.
Lots Of Beneficiaries
The tax revenue generated by the cannabis industry is used to support an array of programs within local communities and state wide. In several states, a portion of the cannabis tax dollars is used to support education and the funding of public schools. Plus, some of the cannabis tax dollars is used to fund substance abuse treatment and youth drug prevention programs. In 2016, Colorado used $16 million in cannabis tax dollars to offer affordable housing loans and grants. In Alaska, 50% of cannabis taxes goes into the state’s general fund, while the other half is directed into the state’s Recidivism Reduction Fund. Massachusetts plans to use some of the cannabis tax dollars to fund programs for restorative justice.
In California, about 45% of the cannabis tax revenue goes into the state’s general fund. Each year, $10 million will be used to fund public university grants for research on better implementing the program. The California Highway Patrol will get $3 million annually to develop effective methods for dealing with cannabis impaired drivers. Another $2 million will go to cannabis research and $10 million will be used to fund community reinvestment programs offering medical care, substance abuse and mental health treatment, legal services and job placement for communities negatively impacted by prior drug laws.
The legal cannabis industry is proving to be a boon for countless communities nationwide. It is providing state and local governments with millions of dollars they can use to tackle long needed projects and improve the quality of life for its citizens.