A report was released by the Marijuana Policy Project (MPP) on May 1 on the combined sale of cannabis across the U.S. states. Since the state-legal, adult-use cannabis market began in 2014, a combined total of more than $15 billion has been generated in tax revenue. However, these figures reported do not include tax revenue from medical cannabis.
The revenue generated in 2022 alone was $3.77 billion. While this figure is healthy, it is a decline relative to the $3.86 billion that was obtained in 2021. Below is a list of the revenue generated since 2014:
- 2014: $68,503,980
- 2015: $264,211,871
- 2016: $530,521,110
- 2017: $736,534,982
- 2018: $1,308,693,928
- 2019: $1,749,459,667
- 2020: $2,814,837,199
- 2021: $3,866,974,690
- 2022: $3,774,783,548
2022’s revenue is the first decline recorded relative to the previous year since sales began in Colorado and Washington in 2014. It is unusual because a higher tax yield was expected, given that New Jersey and New Mexico joined in the sale of recreational cannabis that same year.
Mature Cannabis Markets See Revenue Decline
Every state that has legalized cannabis typically experiences an increase in its tax revenue every year. However, in 2022, it was noted that states which newly legalized pot generated more revenue than they did in 2021. In comparison, states that have a more mature cannabis market experienced a decline in their tax revenue, which contributed to the overall drop in revenue.
There are speculations on the reasons for the decline. Some think it is because of decreasing prices of cannabis in some states due to excess supply. Others think that because there are more certified states, the more mature states have fewer customers. The widespread availability of untaxed intoxicating synthetic cannabinoids gotten from hemp is also believed to have contributed to the decline.
However, it is vital to note that the post-COVID revenue generated by legalized states with more mature markets supersedes that of any pre-COVID year. Thus, the recent drop recorded could also be COVID-related.
The lockdown orders during the COVID-19 pandemic led to an increase in the demand for marijuana. Social interactions were minimized during the lockdown. As such, people could not go out or spend money on dinners, concerts, vacations, or participate in other social activities for fun. There was a significant boost in the purchase of consumer packaged goods. And cannabis was one of the products that could be purchased to make people’s stay at home more pleasant, as opposed to simply watching TV. Hence the increase in its demand.
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Cannabis Industry Has Greatly Boosted U.S. Economy
The cannabis industry has greatly contributed to the U.S. economy’s growth over the years. Consequent to the legalization of cannabis, more states have generated hundreds of millions in tax revenue every year. The new income stream has allowed states to bolster important projects and fund necessary social services. Far-reaching state programs like alcohol and drug treatment, education, job training, veterans’ service, and reinvestment in communities have been experiencing positive growth.
And as more states legalize the sale of medical and recreational marijuana, the impact is sure to reach even greater heights. The president and CEO of MPP, Toi Hutchinson, said that states yet to legalize cannabis “will not only be doing a disservice to their constituents—they will also be leaving money on the table.”
Twenty-two states, including Washington, D.C., have legalized the sale of adult-use marijuana—and the impact on the economy has been record-breaking. Colorado alone has produced a cannabis tax revenue of over $2.1 billion since the sale of adult-use cannabis started in 2014. At least 35% of this revenue has been used to improve its public school system.
Massachusetts launched its adult-use market in 2018 and has recorded over $4 billion in sales as of January 2023. A good amount of the revenue generated has been invested in local government and public transportation.
Missouri, one of the newly legalized states, recorded cannabis sales of $126 million two months after adult-use shops were opened to the public. New Mexico recorded over $300 million in sales after one year of opening the state’s adult-use marijuana market, with thousands of job opportunities created by the industry.
Cannabis undeniably has a lot of economic benefits. As such, other states like Minnesota, Ohio, and New Hampshire are working towards legalizing the sale of recreational cannabis in 2023.
There is a steady and rapidly growing market available for the sale of pots. A recent publication by MJBiz Factbook reveals that cannabis sales are expected to hit $33.5 billion by the end of 2023. And a sale of about $57 million is estimated to be recorded by the end of 2028. This sale tops the chart compared with the money spent on topical pain relief, chocolate, craft beer, and chicken eggs. It is indeed a great opportunity provided by the sale of cannabis to boost a state’s economy by generating large tax revenues.