New MPP report calculates states have collected over $15 billion in tax revenue from recreational marijuana sales by end of 2022

Via this Marijuana Moment article, I see that the Marijuana Policy Project (MPP) has a new report detailing that, from 2014 to 2022, states that have legalized adult-use recreational marijuana sales have together generated more than $15 billion in tax revenue from marijuana sales.  This MPP report, titled "Cannabis Tax Revenue in States that Regulate Cannabis for Adult Use," gets started this way:

Legalizing cannabis for adults has been a wise investment. Since 2014 when sales began in Colorado and Washington, legalization policies have provided states a new revenue stream to bolster budgets and fund important services and programs.  Through the end of 2022, states have reported a combined total of more than $15 billion in tax revenue from legal, adult-use cannabis sales.  In 2022, legalization states generated more than $3.77 billion in cannabis tax revenue from adult-use sales.  In addition to revenue generated for statewide budgets, cities and towns have also generated hundreds of thousands of dollars in new revenue from local adult-use cannabis taxes.

Twenty-two states have legalized cannabis possession for adults 21 and older.  All but two of them — Maryland and Virginia — have also legalized, regulated, and taxed cannabis sales, and Maryland’s governor plans to sign twin bills that are on his desk to do so.

Although cannabis sales have continued to generate billions in annual tax revenue, 2022 marked the first year with a decrease in tax revenues compared to the prior year.   Even as new states came online, we saw a slight decrease in total state cannabis tax revenue — from over $3.86 billion in 2021 compared to $3.77 billion in 2022. Prior to 2022, every legalization state had seen annual increases in cannabis tax revenue.  In 2022, however, six states with the most mature legalization laws experienced decreases in cannabis tax revenue, while newer legalization states generated more cannabis tax revenue in 2022 than in 2021.

Reasons for declining tax revenue include the widespread availability of intoxicating synthetic cannabinoids made from hemp, which are largely unregulated and not subjected to cannabis excise taxes; lower prices in several states due to oversupply; sales beginning in additional states — reducing demand from visitors in more mature states; consumers having less disposable income due to inflation; and — in California — the state reducing the tax rate to make legal cannabis more competitive.  Cannabis businesses also face significant challenges due to ongoing federal prohibition, which drives up costs of rent, banking, and almost everything else, and results in an enormous federal tax burden.   Those burdens do not apply to intoxicating cannabinoids derived from hemp.

As Vicente LLP Director of Economics and Research Andrew Livingston explained, 2022’s revenue decreases were “due to a multitude of factors,” and that one of them is likely COVID-related.  “While 2022 cannabis taxes are lower in some established markets than they were in 2021, it's important to know how COVID-19 and pandemic initiated lockdown orders increased cannabis demand.  People could not spend their money going to concerts, going out to dinner, or vacation travel.   So many people increased their consumption of consumer packaged goods.  Cannabis was a product that could still be purchased and made the difficulty of staying at home for months on end watching TV shows and movies a bit more enjoyable.”

In every state where cannabis tax revenue decreased in 2022, tax proceeds still outperformed every year prior to the COVID-19 pandemic and related shutdowns.

This document reviews each legalization state’s adult-use cannabis tax structure, population, and year-by-year adult-use cannabis tax revenue.  States are listed in chronological order, based on when state-legal cannabis sales began, with the most mature markets first.  These figures include cannabis excise taxes and states’ standard sales taxes that applied to cannabis.  They do not include medical cannabis tax revenue, application and licensing fees paid by cannabis businesses, additional income taxes generated by workers in the cannabis industry, or taxes paid to the federal government.