Cannabis had the highest tax revenue in Colorado and Washington versus alcohol and cigarettes

A new report from the Tax Policy Center shows that cannabis tax revenues in Colorado were seven times higher than alcohol revenues, and Washington earned $559 million in cannabis-related taxes. Although these two states had the highest tax revenues from the plant, they weren’t the only ones where marijuana sales outstripped other prevalent taxable vices. Data from this new cannabis tax revenue report shows that cannabis markets in the United States continue to expand, regularly outpacing alcohol and cigarette tax revenues.

Experts believe the high tax revenues from cannabis sales may not last forever, but the public health impact could positively impact state populations. How do states use this taxpayer money? And what does the future hold for states that tax legal marijuana?

The cannabis tax increases government revenue

Nineteen states currently have cannabis tax laws in place, helping to increase funding for state programs and reduce black market sales. Despite increased federal tax revenues from marijuana sales, cannabis legalization has been slow in more than half of the United States. Due to the lack of state regulations, unlike alcohol and cigarettes, it is up to each state to decide on a tax structure and how these taxes are distributed.

Alcohol, cigarette and gas taxes also contribute to state funds but are regulated by federal agencies. Due to a lack of regulation, different states impose different marijuana taxes, and some impose multiple taxes on medicinal or recreational products.

There are currently three distinct marijuana tax structures in the United States. Some choose to tax based on a percentage of the plant’s price, while others tax based on weight or potency. Many states have allocated this money by state law to specific programs. Others simply add it to residual tax revenue to fund surgeries, public health programs, and other government initiatives.

Impact of increased cannabis sales

The study’s findings highlight several important themes emerging in conversations surrounding marijuana legalization. Legalized states not only generate significant revenue from cannabis sales, but the data also suggests reduced use of substances, including alcohol and cigarettes.

Another study from Florida made some interesting discoveries about the effects of medical marijuana. According to medical marijuana patients, they are far less likely to use opioids to manage pain. Other respondents indicated that medicinal cannabis reduces the symptoms of other illnesses such as PTSD, chronic pain and anxiety.

However, states that have legalized it have also seen an increase in car accidents. Canada was the second country to fully legalize marijuana, and that trend is evident across the border as well. Auto insurance rates in Canada have risen due to legalization and a lack of understanding of how drinking and driving should affect medical marijuana patient rates. There are indications that as law enforcement agencies evolve to account for marijuana users and drink-driving, auto insurance rates will even out.

I’m looking forward to

So what’s the trend for states moving toward marijuana legalization? Colorado and Washington are great examples due to their high revenues, and they are home to two of the most mature cannabis markets in the United States. These two states demonstrate that states can derive a large percentage of their total revenue from legal marijuana taxes.

And while the plant’s weight prices are trending downwards, there is evidence that cannabis use should increase over time to eliminate the deadly and costly effects of alcohol and cigarette use.