Which two states receive more tax revenue from the sale of marijuana than from the sale of alcohol or tobacco?

Cannabis sales generated more revenue for Colorado and Washington State in fiscal 2022 than alcohol or cigarette sales. In eight other states, marijuana tax revenues surpassed those from cigarettes, while in Nevada they surpassed those from alcoholic beverages. The paper, released last Wednesday by the Tax Policy Center, provides a full analysis of different tax models, revenue data and discussions of the most beneficial tax regimes in states that have legalized cannabis.

Tax revenue from weed in Colorado and Washington

Researchers Richard Auxier and Nikhita Airi stated that several issues have arisen since jurisdictions began implementing legalization, although the diversity of state and local tax systems makes it difficult to generalize about marijuana tax policies. One such trend is that the plant is regularly outperforming alcohol and cigarettes in the amount of money it generates for tax collection as the cannabis industry expands.

In fiscal 2022, Colorado took in $353.7 million in marijuana taxes, surpassing only cigarette sales but more than seven times the amount collected in liquor taxes by the Tax Policy Center. On the other hand, Washington state earned $517 million from cannabis taxes, $490 million from alcohol taxes, and $380 million from cigarette taxes.

This latest information is particularly noteworthy given that tax revenues in Colorado and Washington State fell significantly from tax years 2021 to 2022, by -14% and -7% respectively. The study claims that the Colorado and Washington experiences show states can make a significant amount of money from marijuana taxes. This number should mainly increase over time.

The study

The data shows that fiscal year 2022 cannabis tax revenue exceeded alcohol tax revenue in eight of the 11 states that received cannabis tax funds. Along with Colorado and Washington State, Nevada also generated more money from marijuana sales than from cigarette sales. While the study only considers totals for the full fiscal year, there have been other instances where marijuana tax receipts in places where it’s legal have surpassed alcohol and cigarette receipts in specific months or at different time periods.

For example, in Arizona, where marijuana is legal, tax revenue from marijuana sales exceeded that of cigarettes and alcohol combined in March. In Massachusetts, marijuana generates more tax dollars than alcohol, according to state data released in January. By fiscal year-end December 2021, the state had earned $51.3 million from liquor taxes and $74.2 million from cannabis taxes. In Illinois, too, cannabis revenue topped liquor taxes for the first time last year, and by 2021, adult-use marijuana is expected to generate nearly $100 million more in federal revenue than alcohol.

In 2021, “cannabis intakes overtook alcohol by 20%,” according to an analysis of 11 states with legal adult marijuana use released in April by the Institute on Taxation and Economic Policy. Advocates and interest groups have praised these data points. They express the expectation that reduced access to cannabis will result in fewer people using other dangerous drugs, such as alcohol and cigarettes, and highlight the economic opportunities of legalization. According to studies published earlier this year, young people who use less marijuana also generally use less alcohol, nicotine, and over-the-counter drugs.

Similar research

A Gallup study released last month found that more than twice as many Americans believe alcohol negatively affects their consumers and society at large. This is broadly consistent with the findings of another study conducted in March, which found that more Americans thought quitting alcohol and switching to cannabis would be beneficial rather than negative.

The ingredients in alcohol, cigarettes, and marijuana cause specific biological responses that provide pleasurable, satisfying experiences for the user.

Gallup has surveyed Americans about their attitudes towards alcohol and tobacco since the 1930s and 1940s, and more recently the survey has expanded to include questions about marijuana. One purpose of this current research is to update estimates of the frequency of use of these drugs.

All three are used, although alcohol is by far the most common. Nearly 45% of Americans have consumed alcohol in the past week, and another 23% do so regularly. A third are “total teetotalers”. Alcohol consumption has been largely stable over time. Since 1939, an average of 63% of Americans have reported drinking, which is fairly close to the most recent Gallup estimate of 67%.

48% of Americans have used marijuana at some point in their life, compared to 16% who use it now. According to self-reports, marijuana use has increased dramatically over the past 50 years. When the question was first asked in 1969, only 4% of respondents said they had ever tried marijuana. That is now 48%. In 2013, 7% of Americans reported being active marijuana users, up from 16% last summer.

Cigarette smoking prevalence has gradually declined over the years from a peak of 45% in the mid-1950s. Currently, 11% of Americans report smoking, a record low. Three out of ten non-smokers admit to having smoked in the past.

Overall, alcohol use among American adults is far greater than marijuana or cigarette use. In addition, cigarette smoking has declined dramatically since the 1950s, while alcohol consumption has remained relatively constant over the years. Americans now use marijuana more than cigarettes, but this has increased in recent decades.

bottom line

There is no question that cigarette smoking has declined and is likely to continue to do so in the coming years. This reflects both the general public’s awareness of its negative effects and the government’s ongoing efforts to curb its use at all levels. In contrast, marijuana use is more likely to increase than decrease. Marijuana has been illegal for much of its history and is currently illegal for recreational use in more than half of the United States. However, a large part of the American population supports the trend towards increased legalization.

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