It has been over a decade since the first adult-use cannabis markets launched in Washington and Colorado in 2014. Since then, legalizing cannabis for adults has generated nearly $25 billion dollars in state tax revenue to invest in the needs of the states.
Twenty-four states have legalized cannabis possession for adults 21 and older. All but one of them — Virginia — have also legalized, regulated, and taxed cannabis sales. In two legalization states — Delaware and Minnesota — sales have not begun yet.
States have generated a combined total of more than $24.7 billion in tax revenue from legal, adult-use cannabis sales. In 2024 alone, legalization states generated more than $4.4 billion in cannabis tax revenue from adult-use sales, which is the most revenue generated by cannabis sales in a single year. In 2024, seven states collected over $200 million in adult-use cannabis taxes. Four of those states generated over $500 million in revenue, one of which collected over $1 billion.
States with legal, adult-use cannabis sales have allocated tax revenues to a variety of needs, including their General Funds and specific services and programs. Cannabis taxes have provided funding for Medicaid, education, school construction, housing, roads, early literacy, bullying prevention, behavioral health, alcohol and drug treatment, veterans’ services, conservation, job training, conviction expungement expenses, and reinvestment in communities that have been disproportionately affected by the war on cannabis, among many others.
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 are applied to cannabis. They do not include medical cannabis tax revenue, application and licensing fees paid by cannabis businesses, income taxes generated by workers in the cannabis industry, or taxes paid to the federal government. These figures also omit cities and towns’ tax revenue from municipal adult-use cannabis taxes.
Combined Totals By Year (All States)
| Year | Combined Totals By Year |
|---|---|
| 2014 | $68,503,980 |
| 2015 | $264,211,871 |
| 2016 | $530,521,110 |
| 2017 | $736,534,982 |
| 2018 | $1,308,693,928 |
| 2019 | $1,749,459,667 |
| 2020 | $2,856,307,217 |
| 2021 | $3,934,089,074 |
| 2022 | $3,816,898,917 |
| 2023 | $4,185,783,924 |
| 2024 | $4,421,894,498 |
Colorado (pop. 5.9 million) | Tax rate: 15% wholesale, 15% special retail
Colorado voters approved an initiative to regulate cannabis for adults in November 2012, and on January 1, 2014, the state became the first with legal adult-use sales. Colorado already had a developed medical cannabis regulatory system, and many businesses were able to transition to having both a medical and an adult-use counter.[1]
Colorado has generated over $2.6 billion in adult-use cannabis taxes since 2014. Every year since 2017 — the fourth year of sales — Colorado’s adult-use cannabis tax revenue exceeded $220 million.[2] More than $934 million of the revenue has been dedicated to Colorado’s public school system.[3]
The below chart shows the year-by-year totals for Colorado’s cannabis tax revenue. After seven years of rapid growth in cannabis sales and related tax revenue, Colorado has experienced reductions in adult-use cannabis tax revenue since 2021. Cannabis tax revenue peaked at $396 million in 2021. In 2024, the state generated $237 million in cannabis tax revenue.[4] Contributing factors in the recent decline include lower prices[5] and additional states legalizing, resulting in fewer out-of-state consumers. In addition, many states saw a short-term boost in cannabis sales and taxes in 2020-2021, during COVID shut downs.[6]
The $237.4 million Colorado collected in adult-use taxes in 2024 is more than four times the amount of alcohol taxes it collected in 2023.[7]
The figures do not count local sales tax revenues, which have been significant. The city of Denver, for example, applies its standard local sales tax of 4.81% and an additional 5.5% sales tax on adult-use cannabis and collected an estimated $39.6 million in cannabis tax revenue in 2024.[8]
| Year | State Tax Revenue from Adult-Use Cannabis[9] |
|---|---|
| 2014 | $46,104,922 |
| 2015 | $104,759,961 |
| 2016 | $167,157,150 |
| 2017 | $220,688,951 |
| 2018 | $243,466,892 |
| 2019 | $279,155,047 |
| 2020 | $362,027,103 |
| 2021 | $396,157,005 |
| 2022 | $305,034,034 |
| 2023 | $256,756,467 |
| 2024 | $237,436,232 |
| Total (through 2024) | $2,618,743,764 |
| Total (including revenue through April 2025) | $2,691,725,051 |
State Sales Tax Revenue from Adult-Use Cannabis (Colorado)
| Year | State Sales Tax Revenue from Adult-Use Cannabis |
|---|---|
| 2014 | $46,104,922 |
| 2015 | $104,759,961 |
| 2016 | $167,157,150 |
| 2017 | $220,688,951 |
| 2018 | $243,466,892 |
| 2019 | $279,155,047 |
| 2020 | $362,027,103 |
| 2021 | $396,157,005 |
| 2022 | $305,034,034 |
| 2023 | $256,756,467 |
| 2024 | $237,436,232 |
Washington (pop. 8 million) | Tax rate: 37% at retail; 6.5% sales tax
Washington’s voters also approved an adult-use measure in November 2012, and its first stores opened in July 2014. At the time, the state had an unregulated, arguably illegal, medical cannabis dispensary system, which was separate from the regulated adult-use program. This resulted in a slower ramp-up than in Colorado. Until July 2015, taxes were extremely high — 25% at three points of transfer — making it hard to compete with illegal sales. In 2015, the legislature changed the excise tax rate to 37% and created a medical endorsement program to which adult-use stores could apply to join. Washington’s cannabis taxes are among the highest in the nation.[10] Since sales began, the state has generated over $4.7 billion in cannabis excise and sales taxes. Every year since 2020, Washington has brought in more than half a billion dollars in cannabis tax revenue. Over half of the revenue is used for healthcare for low-income children.[11]
As was the case with Colorado, Washington saw steady annual growth in cannabis tax revenue until 2021. Tax revenue increased again in 2023, but then experienced a modest decrease in revenue for the second half of 2024 — for good reason. Starting on June 6, 2024, Washington began exempting medical cannabis patients from cannabis excise taxes.
The below chart shows annual excise and sales tax revenue in Washington state, by year. The figures do not include local taxes, which totaled an estimated $305.5 million from July 2014 through 2024.[12]
| Year | State Tax Revenue from Adult-Use Cannabis[13] |
|---|---|
| June – Dec. 2014 | $22,399,058 |
| 2015 | $159,451,910 |
| 2016 | $302,976,832 |
| 2017 | $397,358,420 |
| 2018 | $437,169,560 |
| 2019 | $477,310,790 |
| 2020 | $614,417,720 |
| 2021 | $630,863,570 |
| 2022 | $529,443,420 |
| 2023 | $532,516,060 |
| 2024 | $516,558,150 |
| Total (through 2024) | $4,620,465,490 |
| Total (including revenue through March 2025) | $4,723,168,980 |
Estimated State Sales Tax Revenue from Adult-Use Cannabis (Washington)
| Year | Estimated State Sales Tax Revenue from Adult-Use Cannabis |
|---|---|
| 2014 | $22,399,058 |
| 2015 | $159,451,910 |
| 2016 | $302,976,832 |
| 2017 | $397,358,420 |
| 2018 | $437,169,560 |
| 2019 | $477,310,790 |
| 2020 | $614,417,720 |
| 2021 | $630,863,570 |
| 2022 | $529,443,420 |
| 2023 | $532,516,060 |
| 2024 | $516,558,150 |
Oregon (pop. 4.2 million) | Tax rate: 17% at retail
Oregon voters approved an initiative regulating cannabis for adult use in November 2014, and the state’s first adult-use stores opened in October 2016. In addition, the legislature allowed medical cannabis dispensaries to sell a limited amount of cannabis (five grams) to adults from October 2015 until December 31, 2016. Those sales were taxed at 25% beginning January 4, 2016. The state’s medical patients (about 0.3% of Oregon’s population and dropping)[14] can buy cannabis tax-free from adult-use stores. In 2021, voters enacted Measure 110 and directed the bulk of the revenue to a new Drug Addiction Treatment and Recovery Services Fund.[15]
Oregon’s total adult-use cannabis revenue crossed $1 billion in 2024. The state saw a slight increase in cannabis tax revenue from $148 million in 2023 to $153 million in 2024.
The below annual tax revenues do not include the 3% sales tax some localities impose. From February 2017 through 2024, local taxes have generated $166 million.[16]
| Year | State Tax Revenue from Adult-Use Cannabis[17] |
|---|---|
| Feb. – Dec. 2016 | $60,154,432 |
| 2017 | $68,646,246 |
| 2018 | $94,226,985 |
| 2019 | $115,915,277 |
| 2020 | $158,336,274 |
| 2021 | $177,773,944 |
| 2022 | $150,316,424 |
| 2023 | $148,133,667 |
| 2024 | $153,795,374 |
| Total (through 2024) | $1,127,298,623 |
| Total (including revenue through March 2025) | $1,161,003,102 |
State Sales Tax Revenue from Adult-Use Cannabis (Oregon)
| Year | State Sales Tax Revenue from Adult-Use Cannabis |
|---|---|
| 2016 | $60,154,432 |
| 2017 | $68,646,246 |
| 2018 | $94,226,985 |
| 2019 | $115,915,277 |
| 2020 | $158,336,274 |
| 2021 | $177,773,944 |
| 2022 | $150,316,424 |
| 2023 | $148,133,667 |
| 2024 | $153,795,374 |
Alaska (pop. 730,000) | Tax rate at wholesale: $50/ounce for most flower; $25/ounce for immature/abnormal buds; $15/ounce for trim; clones: flat rate of $1
Alaska voters approved an initiative to regulate cannabis for adult use in November 2014, and the first adult-use stores opened in October 2016. A number of factors initially resulted in slower revenue generation than in some other states. The state’s medical cannabis program did not have dispensaries, meaning there were no cannabis businesses that could transition to adult-use cultivators and retailers. As a result of a limited supply, many stores closed for large stretches of January 2017 or operated with reduced hours.[18] Since sales began, Alaska has collected more than $189 million in cannabis excise tax revenue. Half of the revenue is now invested in the Recidivism Reduction Fund, which supports reentry programs for currently and formerly incarcerated individuals.[19] Since 2018, another 25% has been directed to the Marijuana Education and Treatment Fund.[20]
Tax revenue steadily climbed for the first five years, and peaked at $28.9 million in 2021. Since 2021, the state has seen a relatively modest decrease in cannabis tax revenue each year. Each year since 2020, annual cannabis tax revenue has still exceeded $26 million.
Alaska has one of the highest tax rates on cannabis. A September 2022 report by the Urban-Brookings Tax Policy Center found Alaska’s tax rate would be the highest in the nation if average cannabis prices were $100/ounce.[21] However, both Washington and Alaska’s prices appear to be over that threshold, and Washington appears to still have a higher effective tax rate.[22]
The below figures show Alaska’s year-by-year and total cannabis excise tax revenue. They do not include additional tax some localities impose.
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