This state expects over $30 million in weed tax revenue, making it more profitable than alcohol

Through Nina Zdinjak

Which vice brings in more taxes – weed or alcohol? It depends on the state, the local trend and the taxes that are imposed. But with the legalization of marijuana, it’s not surprising that Montana is forecasting an increase in tax revenues from cannabis over the next few years, while wine and beer should remain flat.

New revenue projections from Gov. Greg Gianforte’s budget proposal show alcohol taxes should rise slightly, while tobacco tax revenues are expected to fall, Daily Montana reported.

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Cannabis is projected to make significant contributions to the treasury, although it still makes up a small portion of the overall general fund income.

“Total stimulus spending for individuals, businesses, and government agencies in Montana was $11.8 billion,” the budget proposal reads.

According to the new budget proposal, tax revenue from pot sales is expected to reach $50.7 million in fiscal 2024 and $57.7 million in 2025 for the general fund.

In 2023, the first full year of implementation of the Treasure State’s cannabis program for cannabis use, $30.7 million in tax revenue is expected. The budget proposal also projects gross marijuana revenues to reach $61.1 million in 2023 and $91.9 million in 2025.

alcohol tax revenue

For comparison, general fund revenue from alcohol taxes is estimated at $32.6 million in fiscal 2025, slightly up from $30.1 million in 2023.

Interestingly, from 2016 to 2019, the number of bottles of alcohol sold increased by an average of 3.7% per year, and then liquor sales skyrocketed thanks to the COVID pandemic. In 2020, 2021 and 2021, the same sales increased by 16.9%, 20.7% and 10.6%, respectively. Now they’re back to the old pace.

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Regarding tobacco, the budget proposal estimates total revenue from taxes at US$35.5 million in 2025, up from US$36.3 million in 2023.

“I expect tax revenue to pick up a bit year over year and level off after about 25, 26,” said Pepper Petersen, president and CEO of the Montana Cannabis Guild.

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A total 25% tax on recreational cannabis in one state is “ridiculously high,” he added. “Any other item, people would burn down the Capitol… Montanans hate sales taxes.”

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He believes cannabis taxes will come down in the future, adding that he would welcome the elimination of the 4% tax on medical marijuana.

“Obviously, hard alcohol is a lot more destructive to society than marijuana,” Petersen said.

Cannabis developments in Montana

In 2020, Montana officially became the 14th state to legalize adult-use cannabis.

About 58% of voters said yes to the initiative in November’s elections. The initiative legalized the possession and use of one ounce or less of cannabis or eight grams or less of marijuana concentrate by adults over the age of 21.

Additionally, January 1, 2021 began retail marijuana sales for adults 21 and older in Montana.

As of September 2022, dispensaries in Montana, a state of about 1.1 million people, have sold more than $201 million worth of cannabis ($133 million from adult sales). Those sales have generated nearly $29.3 million in tax revenue for the state.

This article originally appeared on Benzinga and has been republished with permission.