Here's How Much Money Each State Could Make from Legal Marijuana

September 20th 2016

People support marijuana legalization for different reasons. Some have embraced the plant's potential medical value. Some object to prohibition because it contributes to America's mass incarceration problem.

Still others see the green behind the green. (We're talking about money here.)

marijuanaStocksy/Cameron Zegers -

A handful of states have already shown that there's a lot of cash to be made from legalization. Colorado took in more than $135 million in tax revenue from legal cannabis sales last year — almost double what the state collected in alcohol taxes. That's a compelling figure no matter where you stand on the issue.

But what about states that haven't made the legalization leap yet: What do they have to gain?

The Tax Foundation set out to answer that question. In a new report, the tax research group estimated the potential marijuana tax revenue for each state.


At the top of the chart, you have an interesting mix of states in terms of existing and proposed marijuana policy.

California — the first state to legalize medical marijuana in the U.S. and one of the likeliest to legalize recreational marijuana this November — could make more than $1 billion annually if all goes as advocates hope on Election Day.

Texas, which has some of the most restrictive marijuana laws in the country, with no plans to expand in the near future, is losing out on a potential $775 million each year.

All told, 28 states in the U.S. could make more than $100 million in marijuana sales taxes pending legalization, the report found.

Of course, these estimates are based on several assumptions about how each state's legal marijuana system would operate. The Tax Foundation "used sales per capita in [Colorado and Washington] and the assumption of a 25 percent effective tax rate to determine the potential tax revenue from marijuana sales in each state."

But each state would be able to set its own tax rate, and it's hard to predict what a given state's market for marijuana would look like.

That said, money for the sake of money isn't quite why advocates champion the economic benefits of legalization.

It's money that could go toward programs and services that benefit taxpayers statewide.

ATTN: previously reported that Colorado is using tax revenue from marijuana sales to fund education services, college scholarships, drug treatment programs, and anti-bullying programs, among other things.

There's no limitation to what a state could use the extra millions for, and so the economic side of the legalization argument has proved to be one of the more compelling aspects of the movement for those on the fence about the plant's medical and recreational utility.

RELATED: States Voting on Marijuana This Year

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