Since Colorado and Washington took the historic step of legalizing recreational cannabis in 2014, the marijuana industry has rapidly expanded, with tax revenue emerging as one of the most significant financial outcomes.
The growing legal cannabis market across the U.S. has generated billions of dollars in tax revenue, benefitting state budgets, funding essential services and providing economic boosts in both mature and newly legal markets. According to the latest figures compiled by Lyle Daly for The Motley Fool, based on official websites and the Tax Foundation, states that have not yet legalized are missing out on nearly $5 billion in tax revenue.
Cannabis Tax Leaders
In 2023, California raked in over $1.08 billion in cannabis tax revenue – a number that underscores the scale of the state’s weed market. Other states, like Illinois and Washington also collected hundreds of millions in tax revenue. The table below outlines cannabis tax revenue collected by each state in their most recent fiscal or calendar year and considering all cannabis markets.
| Order | State | Revenue |
| 1 | California | 1.089.898.823,00 |
| 2 | Washington | 464.496.959,00 |
| 3 | Illinois | 451.868.765,00 |
| 4 | Michigan | 290.300.000,00 |
| 5 | Arizona | 289.879.253,00 |
| 6 | Colorado | 274.121.043,00 |
| 7 | Massachusetts | 272.445.292,00 |
| 8 | Oregon | 150.898.047,00 |
| 9 | Nevada | 120.537.308,00 |
| 10 | Missouri | 74.254.000,00 |
| 11 | Montana | 54.075.570,00 |
| 12 | New York | 50.760.000,00 |
| 13 | New Mexico | 47.243.651,00 |
| 14 | New Jersey | 41.889.891,00 |
| 15 | Maine | 35.593.347,00 |
| 16 | Maryland | 29.880.000,00 |
| 17 | Alaska | 29.477.517,00 |
| 18 | Connecticut | 24.613.366,00 |
| 19 | Rhode Island | 17.203.256,00 |
| 20 | Vermont | 15.210.000,00 |
Read Also: 2024 Cannabis Taxes: States Weigh In On New Approaches To Revenue
States Still Leaving Revenue On the Table
Despite the rapid spread of cannabis legalization, many states have yet to tap into the potential revenue, leaving millions to illicit markets.
According to estimates from the Tax Foundation, states that have not yet legalized cannabis could be losing out on billions of dollars in tax revenue.
The table below highlights the projected cannabis tax revenue for these states if they were to legalize cannabis in the near future.
As you can see, Florida has left a massive amount of tax revenue after Amendment 3 failed garner the necessary 60% of the vote to enact an amendment.
Overall, the leader is Texas, the second largest economy in the U.S. after California.
| Order | State | Revenue |
| 1 | Texas | 492.056.337,00 |
| 2 | Florida | 454.981.259,00 |
| 3 | Pennsylvania | 315.223.591,00 |
| 4 | Georgia | 250.470.344,00 |
| 5 | Virginia | 211.857.590,00 |
| 6 | North Carolina | 197.164.241,00 |
| 7 | Indiana | 172.219.718,00 |
| 8 | Tennessee | 155.646.987,00 |
| 9 | Minnesota | 143.003.873,00 |
| 10 | Wisconsin | 133.094.405,00 |
| 11 | Oklahoma | 128.481.377,00 |
| 12 | Louisiana | 116.350.821,00 |
| 13 | South Carolina | 110.883.529,00 |
| 14 | Kentucky | 92.260.563,00 |
| 15 | Alabama | 86.622.418,00 |
| 16 | Iowa | 83.888.771,00 |
| 17 | Kansas | 74.833.568,00 |
| 18 | Arkansas | 63.215.571,00 |
| 19 | Mississippi | 60.481.925,00 |
| 20 | Utah | 58.260.837,00 |
| 21 | West Virginia | 41.175.548,00 |
| 22 | Idaho | 38.783.607,00 |
| 23 | Nebraska | 37.245.931,00 |
| 24 | New Hampshire | 36.733.372,00 |
| 25 | Hawaii | 28.361.581,00 |
| 26 | Delaware | 26.482.199,00 |
| 27 | North Dakota | 16.743.584,00 |
| 28 | South Dakota | 16.060.172,00 |
| 29 | Wyoming | 13.668.232,00 |
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Long-Term Potential
Looking ahead, states that have legalized marijuana will continue to see tax revenue grow as markets mature and demand stabilizes.
Early adopters have already seen billions in revenue, while newer markets like Michigan and Illinois are catching up quickly.
As more states legalize cannabis, especially in the wake of budget deficits and increased pressure on public services, marijuana tax revenue could play a critical role in financing key state priorities, from education to infrastructure.
States still hesitant about legalization should consider the economic benefits already realized by their peers. As the data shows, legal cannabis is not just a societal shift but a financial one, with states that embrace it reaping significant rewards.
- Read Next: The Hidden Cost Of Legal Weed: Why Marijuana Taxes Are Hitting Your Wallet Harder Than You Think
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