Potential Marijuana Tax Revenue in Every State

September 20, 2016 by Steven M. Peters

Concept photograph of cannabis leaf made of US dollar billsFour states and the District of Columbia have voted since 2012 to legalize the retail sale of marijuana. One main incentive of legalization is the tax revenue states receive from marijuana sales. The first two states to legalize marijuana — Colorado and Washington — began sales in 2014. After a slow start, tax revenues now exceed expectations in both states.

While the legal structure supporting marijuana sales would be quite different in each U.S. region, other states can begin to better understand the financial impact legalization would have on their states. The Tax Foundation used sales per capita in these two states and the assumption of a 25% effective tax rate to determine the potential tax revenue from marijuana sales in each state.

While tax revenue from marijuana sales exceeded expectations in both Colorado and Washington, the revenue increase remains small relative to the overall state tax revenue. This could support arguments of both those who claim the financial incentives are enough to push for legalization, and those who claim they are not worth the potential risks.

Click here to see the potential tax revenue from recreational marijuana in each state.

Click here to see the 14 next states to legalize pot.

Click here to see the 11 states least likely to legalize marijuana.

For example, based on a 25% tax rate — the lowest among the four states that legalized marijuana — potential annual revenues for states legalizing marijuana would likely range from $16 million in less populated states such as Wyoming to $1.1 billion in California. When compared to all tax revenue statewide, the percentage increase of this potential revenue ranges from only a 0.3% increase in state tax revenue in North Dakota to a 1.6% increase in New Hampshire.

Increasing tax revenues is not the only financial benefit of legalization. States also save from spending less on enforcing marijuana laws. However, this saved money is at least partially repurposed to regulating the new market.

Marijuana legalization is still hotly debated nationwide, with many states likely to legalize soon while others are doubtful. Based on two previous analyses, 24/7 Wall St. identified the next 14 states to legalize marijuana and the 11 states least likely to legalize marijuana. If all of the 14 states legalize, the combined annual additional revenue is expected to be $3.1 billion. The 11 states least likely to legalize would miss out on an estimated $1.2 billion annually.

To identify the potential tax revenue from the sale of marijuana in every state, 24/7 Wall St. used estimates based on sales per capita in Colorado and Washington from The Tax Foundation. All potential revenues are based on a 25% tax rate. Total state tax revenues are from the U.S. Census Bureau. Marijuana usage figures are from the Substance Abuse and Mental Health Services Administration. The likelihood of legalization is based on two previous analyses from 24/7 Wall St.

This is the potential tax revenue from marijuana sales in every state.

View of state capitol in Montgomery, Alabama

1. Alabama
> Potential pot tax revenue: $134 million
> Total state tax revenue: $9.29 billion (24th lowest)
> Marijuana use rate: 5.6% of adults (5th lowest)
> Likelihood of legalizing: Low

Alaskan Summer

2. Alaska
> Potential pot tax revenue: $20 million
> Total state tax revenue: $3.39 billion (8th lowest)
> Marijuana use rate: 12.2% of adults (7th highest)
> Likelihood of legalizing: N/A

Saguaro arizona

3. Arizona
> Potential pot tax revenue: $188 million
> Total state tax revenue: $13.08 billion (20th highest)
> Marijuana use rate: 8.9% of adults (14th highest)
> Likelihood of legalizing: High

Little Rock, Arkansas

4. Arkansas
> Potential pot tax revenue: $82 million
> Total state tax revenue: $8.94 billion (22nd lowest)
> Marijuana use rate: 6.8% of adults (20th lowest)
> Likelihood of legalizing: Low

The historic cable car on San francisco city, california

5. California
> Potential pot tax revenue: $1.08 billion
> Total state tax revenue: $138.07 billion (the highest)
> Marijuana use rate: 9.3% of adults (13th highest)
> Likelihood of legalizing: High

Flatirons Boulder, Colorado

6. Colorado
> Potential pot tax revenue: $150 million
> Total state tax revenue: $11.76 billion (22nd highest)
> Marijuana use rate: 15.2% of adults (the highest)
> Likelihood of legalizing: N/A

Skyline of Hartford Connecticut on a beautiful sunny day

7. Connecticut
> Potential pot tax revenue: $99 million
> Total state tax revenue: $15.94 billion (19th highest)
> Marijuana use rate: 8.6% of adults (17th highest)
> Likelihood of legalizing: High

Wilmington, Delaware

8. Delaware
> Potential pot tax revenue: $26 million
> Total state tax revenue: $3.18 billion (7th lowest)
> Marijuana use rate: 8.2% of adults (18th highest)
> Likelihood of legalizing: High

Daytona Beach, Florida

9. Florida
> Potential pot tax revenue: $557 million
> Total state tax revenue: $35.38 billion (5th highest)
> Marijuana use rate: 7.6% of adults (25th highest)
> Likelihood of legalizing: Medium

Athens, Georgia

10. Georgia
> Potential pot tax revenue: $281 million
> Total state tax revenue: $18.63 billion (16th highest)
> Marijuana use rate: 8.0% of adults (20th highest)
> Likelihood of legalizing: Low

Honolulu County, Hawaii

11. Hawaii
> Potential pot tax revenue: $39 million
> Total state tax revenue: $6.03 billion (14th lowest)
> Marijuana use rate: 7.9% of adults (21st highest)
> Likelihood of legalizing: Medium

Boise, Idaho capital building

12. Idaho
> Potential pot tax revenue: $46 million
> Total state tax revenue: $3.67 billion (9th lowest)
> Marijuana use rate: 6.3% of adults (14th lowest)
> Likelihood of legalizing: Low

Chicago, Illinois 4

13. Illinois
> Potential pot tax revenue: $354 million
> Total state tax revenue: $39.18 billion (4th highest)
> Marijuana use rate: 7.7% of adults (23rd highest)
> Likelihood of legalizing: High

Indianapolis at sunrise

14. Indiana
> Potential pot tax revenue: $182 million
> Total state tax revenue: $16.85 billion (17th highest)
> Marijuana use rate: 7.6% of adults (24th highest)
> Likelihood of legalizing: Low

Des Moines, Iowa

15. Iowa
> Potential pot tax revenue: $86 million
> Total state tax revenue: $8.27 billion (20th lowest)
> Marijuana use rate: 5.0% of adults (2nd lowest)
> Likelihood of legalizing: Medium

Kansas Sunset in the Flint Hills

16. Kansas
> Potential pot tax revenue: $80 million
> Total state tax revenue: $7.33 billion (18th lowest)
> Marijuana use rate: 6.4% of adults (17th lowest)
> Likelihood of legalizing: Low

Kentucky (horse farm)

17. Kentucky
> Potential pot tax revenue: $122 million
> Total state tax revenue: $11.10 billion (24th highest)
> Marijuana use rate: 6.9% of adults (21st lowest)
> Likelihood of legalizing: Medium

Lake Charles, Louisiana

18. Louisiana
> Potential pot tax revenue: $128 million
> Total state tax revenue: $9.70 billion (25th highest)
> Marijuana use rate: 6.2% of adults (10th lowest)
> Likelihood of legalizing: Medium

Mount Katahdin, Baxter State Park, Maine

19. Maine
> Potential pot tax revenue: $37 million
> Total state tax revenue: $3.85 billion (10th lowest)
> Marijuana use rate: 12.9% of adults (5th highest)
> Likelihood of legalizing: High

Johns Hopkins, Maryland

20. Maryland
> Potential pot tax revenue: $165 million
> Total state tax revenue: $18.93 billion (15th highest)
> Marijuana use rate: 8.6% of adults (15th highest)
> Likelihood of legalizing: High

Boston, Massachusetts

21. Massachusetts
> Potential pot tax revenue: $187 million
> Total state tax revenue: $25.24 billion (9th highest)
> Marijuana use rate: 12.0% of adults (8th highest)
> Likelihood of legalizing: High

Detroit, Michigan

22. Michigan
> Potential pot tax revenue: $273 million
> Total state tax revenue: $24.80 billion (10th highest)
> Marijuana use rate: 10.4% of adults (10th highest)
> Likelihood of legalizing: High

Minneapolis, Minnesota

23. Minnesota
> Potential pot tax revenue: $151 million
> Total state tax revenue: $23.13 billion (12th highest)
> Marijuana use rate: 7.3% of adults (25th lowest)
> Likelihood of legalizing: Medium

Biloxi Beach at Sunset, Mississippi

24. Mississippi
> Potential pot tax revenue: $82 million
> Total state tax revenue: $7.57 billion (19th lowest)
> Marijuana use rate: 5.9% of adults (8th lowest)
> Likelihood of legalizing: Medium

Springfield, Missouri

25. Missouri
> Potential pot tax revenue: $167 million
> Total state tax revenue: $11.24 billion (23rd highest)
> Marijuana use rate: 8.1% of adults (19th highest)
> Likelihood of legalizing: Medium

Beartooth Mountains at dawn, Red Lodge, Montana, USA.

26. Montana
> Potential pot tax revenue: $28 million
> Total state tax revenue: $2.66 billion (4th lowest)
> Marijuana use rate: 10.2% of adults (11th highest)
> Likelihood of legalizing: High

Lincoln, Nebraska

27. Nebraska
> Potential pot tax revenue: $52 million
> Total state tax revenue: $4.88 billion (11th lowest)
> Marijuana use rate: 5.8% of adults (7th lowest)
> Likelihood of legalizing: Medium

Reno, Nevada downtown during winter

28. Nevada
> Potential pot tax revenue: $79 million
> Total state tax revenue: $7.14 billion (17th lowest)
> Marijuana use rate: 7.7% of adults (22nd highest)
> Likelihood of legalizing: High

New Hampshire

29. New Hampshire
> Potential pot tax revenue: $37 million
> Total state tax revenue: $2.28 billion (3rd lowest)
> Marijuana use rate: 11.7% of adults (9th highest)
> Likelihood of legalizing: Medium

Fishing Pier Ocean Grove, New Jersey, beach

30. New Jersey
> Potential pot tax revenue: $246 million
> Total state tax revenue: $29.68 billion (7th highest)
> Marijuana use rate: 6.3% of adults (11th lowest)
> Likelihood of legalizing: Medium

Albuquerque, New Mexico 2

31. New Mexico
> Potential pot tax revenue: $57 million
> Total state tax revenue: $5.76 billion (13th lowest)
> Marijuana use rate: 9.7% of adults (12th highest)
> Likelihood of legalizing: Medium

new york tobacco

32. New York
> Potential pot tax revenue: $544 million
> Total state tax revenue: $76.98 billion (2nd highest)
> Marijuana use rate: 8.6% of adults (16th highest)
> Likelihood of legalizing: High

Charlotte North Carolina

33. North Carolina
> Potential pot tax revenue: $276 million
> Total state tax revenue: $23.40 billion (11th highest)
> Marijuana use rate: 6.7% of adults (19th lowest)
> Likelihood of legalizing: Medium

North Dakota Badlands

34. North Dakota
> Potential pot tax revenue: $21 million
> Total state tax revenue: $6.12 billion (15th lowest)
> Marijuana use rate: 5.8% of adults (6th lowest)
> Likelihood of legalizing: Medium

Akron, Ohio

35. Ohio
> Potential pot tax revenue: $319 million
> Total state tax revenue: $27.02 billion (8th highest)
> Marijuana use rate: 7.0% of adults (23rd lowest)
> Likelihood of legalizing: Medium

Oklahoma City Sunrise

36. Oklahoma
> Potential pot tax revenue: $108 million
> Total state tax revenue: $9.10 billion (23rd lowest)
> Marijuana use rate: 6.3% of adults (12th lowest)
> Likelihood of legalizing: Low

Sunrise Over Crown Point at Columbia River Gorge, Oregon

37. Oregon
> Potential pot tax revenue: $111 million
> Total state tax revenue: $9.68 billion (25th lowest)
> Marijuana use rate: 12.6% of adults (6th highest)
> Likelihood of legalizing: N/A

Philadelphia, Pennsylvania

38. Pennsylvania
> Potential pot tax revenue: $352 million
> Total state tax revenue: $34.19 billion (6th highest)
> Marijuana use rate: 7.3% of adults (24th lowest)
> Likelihood of legalizing: Medium

Providence, Rhode Island 4

39. Rhode Island
> Potential pot tax revenue: $29 million
> Total state tax revenue: $2.97 billion (6th lowest)
> Marijuana use rate: 12.9% of adults (4th highest)
> Likelihood of legalizing: High

Charleston Sunset, South Carolina

40. South Carolina
> Potential pot tax revenue: $135 million
> Total state tax revenue: $8.93 billion (21st lowest)
> Marijuana use rate: 6.6% of adults (18th lowest)
> Likelihood of legalizing: Medium

Pierre, South Dakota

41. South Dakota
> Potential pot tax revenue: $24 million
> Total state tax revenue: $1.61 billion (the lowest)
> Marijuana use rate: 4.8% of adults (the lowest)
> Likelihood of legalizing: Low

Knoxville, Tennessee

42. Tennessee
> Potential pot tax revenue: $182 million
> Total state tax revenue: $11.81 billion (21st highest)
> Marijuana use rate: 5.5% of adults (3rd lowest)
> Likelihood of legalizing: Low

Texas bluebonnet field and fence in spring

43. Texas
> Potential pot tax revenue: $755 million
> Total state tax revenue: $55.26 billion (3rd highest)
> Marijuana use rate: 5.9% of adults (9th lowest)
> Likelihood of legalizing: Medium

Provo Orem, Utah Valley wildflowers

44. Utah
> Potential pot tax revenue: $82 million
> Total state tax revenue: $6.31 billion (16th lowest)
> Marijuana use rate: 5.6% of adults (4th lowest)
> Likelihood of legalizing: Low

Stowe, Vermont

45. Vermont
> Potential pot tax revenue: $17 million
> Total state tax revenue: $2.96 billion (5th lowest)
> Marijuana use rate: 13.4% of adults (2nd highest)
> Likelihood of legalizing: High


University of Virginia, Charlottesville, Virginia

46. Virginia
> Potential pot tax revenue: $231 million
> Total state tax revenue: $18.95 billion (14th highest)
> Marijuana use rate: 7.0% of adults (22nd lowest)
> Likelihood of legalizing: Medium

Yakima, Washington

47. Washington
> Potential pot tax revenue: $197 million
> Total state tax revenue: $19.45 billion (13th highest)
> Marijuana use rate: 13.1% of adults (3rd highest)
> Likelihood of legalizing: N/A

View of mountains in the Potomac Highlands of West Virginia.

48. West Virginia
> Potential pot tax revenue: $51 million
> Total state tax revenue: $5.38 billion (12th lowest)
> Marijuana use rate: 6.4% of adults (15th lowest)
> Likelihood of legalizing: Medium

Milwaukee, Wisconsin 3

49. Wisconsin
> Potential pot tax revenue: $159 million
> Total state tax revenue: $16.41 billion (18th highest)
> Marijuana use rate: 6.4% of adults (17th lowest)
> Likelihood of legalizing: Medium

Cheyenne, Wyoming

50. Wyoming
> Potential pot tax revenue: $16 million
> Total state tax revenue: $2.26 billion (2nd lowest)
> Marijuana use rate: 6.3% of adults (13th lowest)
> Likelihood of legalizing: Low

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