California cannabis tax revenue
California cannabis tax revenue

California Marijuana Tax Revenue Hits Over $800 Million in Record Smashing Year

Legal marijuana sales generated over $800 million in tax revenue for the state of California

Posted by:
BehindTheWaves on Thursday Sep 9, 2021

California Crushes Cannabis Tax Revenue Record in Latest Fiscal Year

California cannabis tax revenue

Since 1996 when California first legalized weed, the state has been on an upward trajectory in generating revenue from the substance. California has set new records with its cannabis sales and broken those records by achieving even better and higher ones. 

Once again, California is in the news for smashing its marijuana tax revenue records in the last fiscal year, and the numbers will blow your mind!


A new mind-blowing record

It has been reported that California generated $817 million in taxes from the sales of adult-use cannabis from 2020-2021. This new record is 55% more than the state’s marijuana earnings in 2019. 

In previous times, these figures may have been contested by the opposition party in the state to score political points and insisting that the cannabis industry is not as profitable as it is projected to be. 

But all reservations about the figures were shut down because the current Analyst’s office is bipartisan. The Analyst maintains that it arrived at the figures through a combination of excise and cultivation tax returns for the 4th quarter. The report suggests that the cannabis revenue raised the most tax dollars within the fiscal year in a single three-month timeline since legal sales started. 

Interestingly, these new figures do not consider other additional sales taxes which were derived from marijuana, neither does it include locally-generated revenue from municipalities. This record-breaking revenue is also a sign that the Californian cannabis market has performed well beyond all expectations.


How the COVID-19 pandemic influenced the new tax revenue records 

The exciting new figures are attributed to an increase in sales from the Coronavirus pandemic began. While the pandemic forced other businesses to shut down, the companies in the marijuana sector thrived despite the industry not getting federal aid given to other companies. 

More cannabis users relied on marijuana to manage their anxieties and other issues they needed to deal with as the world experienced a series of “Lockdowns” and “stay home” orders. The more cannabis was consumed in California during the pandemic, the more tax revenues skyrocketed.

More so, the new figures are regarded as a primary tally of California’s marijuana returns as most businesses file their returns at the last hour, so quarterly tools are amended upwards. This led to the amount from the previous quarter being revised in a new report: from $163 million, the revenue increased to $197 million. 

But this doesn’t mean that COVID-19 alone is responsible for this increase in revenue in the California cannabis market. The world is gradually getting out of the negative impact of the pandemic as more people are getting vaccinated. So yes, the pandemic boosted revenue generations, but even after that initial time, cannabis sales have continued to soar in the California market.


A persistent rise in tax revenue record in several states since 2018

An analyst report of new data from the California Department of Tax and Fee Administration asserts that since the start of 2018, the entire recreational cannabis revenue this year is at $2.8 billion. This figure includes the following:


  • Excise tax at $1.4 billion


  • Cultivation tax at $347.4 million


  • Sales tax at $1 billion


However, California is not the only state making a lot of progress with its cannabis market. A recent study of some states, including Oregon, Washington D.C, Alaska, and Colorado, found that cannabis purchases and sales increased even more during the pandemic. 

The report also shows that the increase is significantly higher than what was derived in the last two years, which means that cannabis revenues have been rising and will continue to rise. In July, three states experienced record-breaking sales for marijuana. This fact also applies to the Missouri cannabis program. 

In July, Illinois witnessed an increase of $128 million in marijuana purchases which is more than double of its total monthly sales from the previous year. July now becomes the fifth month for which deals in the Illinois market have gone beyond $100 million. If this pattern continues, the state will report up to $1 billion in sales in 2021

In the state of Maine, in July, adult-use cannabis sales were at $9.4 million, a 45% increase from the previous month’s record. 

According to data from the state’s regulatory body, Michigan’s cannabis sales also broke a new record in July with over $171 million in marijuana transactions. An additional $128 million from adult-use cannabis sales was reported in July and $43 million in marijuana purchases. 

Throughout the COVID-19 period, several states permitted marijuana retailers to stay open for business. In those states, the governors and other market regulators declared cannabis enterprises as essential services

Some other jurisdictions declared emergency regulations that allowed for delivery services, curbside pickup, and other consumer and business-friendly policies that encouraged social distancing. These policies also meant that cannabis sales continued and contributed to the rise in tax revenues recorded by states. 


The future of cannabis tax revenue in California and other states

So as California celebrates this groundbreaking tax revenue record, one has to wonder what the next record will be in the next fiscal year. Well, going by the ever-increasing interest in cannabis because of its beneficial cannabinoid, it is safe to say that marijuana purchases and sales will continue to soar. 

The marijuana industry will not slow down anytime soon, and this means states like California will continue to bask in the tax revenue it generates. As residents in marijuana-legal states continue to enjoy access to their favorite plants, demand will increase, which means more money for the states. 


Bottom Line 

California is just one of the states that has impressive tax revenues from marijuana sales. There are several states with impressive figures to show. These figures reinforce the fact that the cannabis industry is a significant contributor to the American economy at the state level. 

Since California has been reporting its tax revenue, the figures have always gone up, and this means by this time in 2022, we will see even more gains.

 Hopefully this record-breaking internally generated tax revenues will serve as a motivating factor for other states to legalize cannabis if they haven’t done so already.








What did you think?

ganja leaf left  Keep reading... click here  ganja leaft right

Please log-in or register to post a comment.

Leave a Comment: