According to a recently-released New Frontier Data report, state taxes on cannabis and cannabis-related products will amount to $655 million in income for US states in 2017. Already, taxes on cannabis are creating more revenue than taxes on alcohol. By 2020, the report estimates, tax revenue from marijuana will have grown to over $1.8 billion. For many states where marijuana is legal, revenues are growing at a rapid pace. In Colorado, total tax revenue from marijuana grew 57.2% year over year from FY 2015-16 to FY 2016-17.
One reason for the gargantuan tax revenue is simply the rate at which marijuana is taxed. Many states, viewing marijuana as a vice, implement a high rate of taxation on its sale. For example, the state of Washington has enacted a 37% retail tax on cannabis. Even in states with lower tax rates, such as California, where the rate of taxation is only 15%, income can be significant: a recent Californians for Responsible Marijuana Reform report estimates that the total tax income for California alone will soon reach $1 billion annually.
The income from the taxation of marijuana could provide a powerful incentive for the continued legalization of marijuana on the state level.