Cannabis-Related Tax Revenue Surpasses Alcohol in Legal Cannabis States

Washington, DC: Legal cannabis states generated more revenue from retail cannabis sales than they did from alcohol sales, according to data provided by the Institute on Taxation and Economic Policy (ITEP).

According to ITEP’s analysis, legal states in 2021 collected an estimated 20 percent more in taxes from retail cannabis sales than from the sale of alcohol products. In California, cannabis excise taxes brought in more than double the revenue of alcohol-related taxes. In Colorado, cannabis-tax revenues totaled seven times those of alcohol.

“[I]t is remarkable that in the span of just a few years, the narrow ‘sin taxes’ that states created to apply to cannabis purchases have managed to surpass the comparable taxes that have long applied to alcohol,” authors of the analysis wrote.

According to a separate analysis provided earlier this year by the Marijuana Policy Project, tax revenues derived from the licensed retail sale of state-legal, adult-use cannabis products grew by more than 30 percent between 2020 and 2021, totaling over $3.7 billion last year.

This article originally appeared in NORML. Additional information is available from NORML’s fact sheet, ‘Marijuana Regulation: Impact on Health, Safety, Economy.’