Cannabis Tax Revenue Soars In New Markets, Slumps In Mature StatesJanuary 3, 2023
The top seven states with adult-use cannabis programs collectively brought in $2.4 billion in tax revenue in the first nine months of 2022, according to Impact Databank. That figure was a 7.7% decline from the same period of the year prior, in which revenues totaled $2.6 billion and reached $3.4 billion for the full calendar year. Nonetheless, it’s not to be overlooked how much the cannabis industry and the taxes it contributes has grown—in 2017 those same states generated only $666 million for the year, making for a fivefold increase in only four years. That growth was driven by a mix of new markets coming online, new consumers entering the category, and increased retail access.
California remains at top of the heap, more than double its closest competitor. It generated $836.3 million in the nine-month period ending in September 2022, down 15% from 2021. Still, the Golden State is on pace to surpass $1 billion in tax revenue for the year, extrapolating from 2021’s 12-month total of $1.3 billion. Washington State, whose legal sales date back to 2014 and which carry some of the highest excise taxes of any state, was second with $361.7 million in tax revenue generated for the nine months. That made for a similar decline, slipping 12.8%. The trend held true for the other two mature markets in the top seven—Colorado and Oregon—whose revenues fell 23.1% and 15.3%, respectively, to $302.2 million and $135.5 million.
Younger markets saw strong growth. Illinois, which has leapfrogged Colorado for the No.-3 spot on the list, saw its revenues rise 14.4% to $356 million year-on-year. Massachusetts, which began sales in earnest in 2019, brought in $220.3 million through September, good for a 14.8% improvement over 2021. And Arizona’s tax revenues grew 25.6% to $198.1 million.—Danny SullivanSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning. You will also receive the Cannabis edition as part of your subscription.