Huge Tax Revenue Is Being Generated From This Fairly New Industry


    Since the legalization of marijuana across several states in the U.S., the cannabis industry has been growing in leap and bounds. Eleven states have legalized the use of marijuana medically and recreationally while thirty-three states have legalized it for therapeutic use alone. Even in recent years with the expansion of the medical marijuana program of different states such as increasing the number of its dispensaries and adding more qualifying conditions the growth has been nothing short of phenomenal.

    The cannabis industry is worth billions of dollars and putting forth awesome sales, the total record sales are hitting $50 billion and a job increase of 75%. The cannabis industry has a total of 250,000 people on its payroll, with the number expected to hit 330,000 by the year 2022. The cannabis industry has been recognized as the fastest-growing industry in the U.S. with a growth rate of 110% between the years 2017 to 2020 and expected to have an economic impact of $77 billion by 2022.


    The industry’s growth and strong financial numbers have also attracted investors who are looking to get a little of the cash cow. Thus causing an increase in the stock market price for these cannabis companies. With such huge and impressive numbers, if you say that the government is making quite a fortune from this industry you wouldn’t be far from the truth.

    It is important to note that since cannabis is considered as a Schedule 1 drug at the federal level and considered illegal the federal government still receives tax known as the federal income tax from the cannabis industry which comes under the internal revenue act of the 280E. This makes it impossible for the cannabis industry to get deductions in taxes. With the federal government making about $2.8 billion in taxes.

    In this post, we would be highlighting how much the state government of some specific states earn across various geographical locations in the U.S.

    New York

    The New York cannabis industry has grown a lot in the past two years and this can be attributed to the addition of chronic pain as a qualifying condition. 37,000 patients were added to the medical marijuana program in the past year, experiencing a growth rate of 128%. Getting a medical marijuana card in NY has been simplified as it can be applied online having visited a physician who will confirm the presence of a qualifying condition then issue you a physician’s certification needed to continue the processing online.

    New York will be relaunching its bid in 2020 to legalize the use of recreational marijuana as the plan failed in 2019. However, plans are already underway to re-enact and Gov Andrew Cuomo is already making efforts with Connecticut’s governor to draft a joint approach towards its legalization. The bill was rejected previously based on the fact that the bill wasn’t all-inclusive and didn’t guarantee equity and social justice. This shortcoming is been looked into as the bill is set to be repurposed. The New York state government makes about $40 million from the medical marijuana program.


    California is one of the states that quickly bought into the use of marijuana medically and recreationally. The sales of cannabis in the year 2019 was an astounding $3 billion, with $1.8 billion coming from sales of recreational marijuana and the remaining 40% from medical marijuana. In 2018, the state made about $228 million in taxes. $82 million in sales tax, $128 million in excise tax, and $18 million in cultivation tax. The state has also added cultivation and excise tax on the sales of the product which was implemented in 2019, which saw the tax for 2019 soar to $300 million.


    Washington is one of the states that has legalized marijuana both recreationally and medically and has seen a huge growth in the industry. The industry averaged a sale of $80 million in 2018 & 2019. In 2019, there are over 500 retail licenses, 151 producer licenses, 221 processor licenses, and 17 transportation licenses. The total sale in 2018 hit $1 billion, and the state made $362 million in excise tax in 2018 and $387 million in 2019 with the sales tax at a whopping 37%.


    Oregon as a state has also legalized the use of marijuana both ways and thus would be expectedly making more money than states that only operate medically. Medically it was legalized in 1998 and recreationally in 2014, thus showing how early they subscribed to its usage. The possession limit all round is 28.35g anything more is considered illegal. The state made $102 million in the fiscal year 2019 a 29% increments to last year’s $82 million. The sales tax is 20%. The total revenue tax made is about $180 million in which a large chunk is set aside for schools (40%), while the rest is shared amongst mental health (20%), state police (15%), counties (10%), and Oregon Health Authority (5%).