How Much Tax Revenue Do States Get from Legal Cannabis?

marijuana taxes at the state level

I don’t subscribe to the idea that you need to legalize cannabis for tax revenue – but try to convince a politician to legalize without making bank. Taxing marijuana has been one of the only strategies to get lawmakers on board and some have even completely flipped on their position, quit their jobs and became shareholders in cannabis businesses.

That’s because cannabis makes a lot of money.

California pulled in something like $3 Billion dollars in Cannabis sales and Colorado pulled in a little over $1.5 billion in sales.

Fortunately, we have some insight nowadays on how much tax revenue cannabis is generating especially since places like Colorado and Washington has had cannabis legal on the books for almost a decade now.

In Colorado, tax revenue has steadily climbed over the past six years. From February to December 2014 the state collected approximately $67.6 million. From January to November 2020 that figure had increased nearly five-fold to $355 million. To date, Colorado has collected almost $1.6 billion in revenue from marijuana sales, according to the Colorado Department of Revenue. - Source

The Problem with too much tax

While we’re seeing these amazing numbers out of Colorado, California has a large portion of their industry still subjected to the black and grey market. This is because where Colorado has a 10% on cannabis, California sits anywhere between 20% and 40% with their taxation processes.

What this does is drive the price of weed up significantly driving people to the streets to buy their cannabis. Think about it, if you buy $20 of weed with a 40% tax, you’re paying almost $30 for the weed. Why? Just because there’s money hungry politicians that want their fix of the green – the almighty dollar.

Canada is said to have roughly 80% of their market still buying from unlicensed providers and why wouldn’t you? Canada’s state run program is said to deliver subpar weed at high prices. Wouldn’t you rather go down to your buddy who grows crispy cannabis at home and give him some dough for his efforts?

Or better yet, wouldn’t you rather invest the money in growing your own weed? I would, I mean – I do.

Is taxation necessary?

As an anarchist – I typically am opposed to any form of forced government policy, but even I wouldn’t have a problem chipping in to fix roads or help fund building hospitals or some junk like that. But unfortunately, the vast majority of your taxes are either getting “misplaced” or lost and typically gobbled up by the Pentagon.

Of course, these aren’t your state taxes but rather your federal taxes but the same practices holds true on a State level. I recently wrote about how legalized cannabis exposed corruption in “small town government” – but don’t think it’s only limited to small towns.

There’s corruption on virtually every level of government because when you give people power – like Senators and such – who can remain in power for decades, they become targets for wealthy corporations who make “donations”.

Donations are essentially the “I’m buying a politician fee” for corporations. Often times these politicians also get great positions or get stock in businesses they helped while in office.

If you don’t think this happens where you live – I’m sorry to have ruined your innocence.

Cannabis and the Cash Cow

Cannabis is the fastest growing and most lucrative market in the world with a potential for generating Trillions [when you include recreational, hemp and medical].

The government loves money. If you could convince the government that they could make bank if they legalized public blow-jobs – there would be a few of them advocating for “The BLOWERS ACT! Or something of the sorts.

The problem is that lobbying exist. Companies can pay lobbyists to help shift or even draft up legislation that favors a particular group of people. Just take a look at tech companies who are constantly trying to dominate the market and make it impossible for competition to come in. Companies like Twitter and Facebook among the guilty.

Cannabis – is a source of income. Now as we are finding ourselves in the middle of a pandemic, the allure of weed money is only going to grow. The problem is that if you legalize with the idea of taxing it, you might end up with a California or Canada situation.

Thus, it is important to keep the taxes as low as possible because none of the problems in California or Canada can be seen in Colorado. Of course, people are going to Colorado, buying cheaper weed and exporting it to prohibition markets to flip it – but that’s just good business sense.

But that isn’t the same as having a thriving black market amidst a legal marketplace. If 80% of your consumers are still buying it from “illegal sources” – did you really legalize cannabis?