Marijuana Tax Revenues Surpass That of Alcohol in Legalized States

Legal marijuana states generated more revenue from retail marijuana 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 collected an estimated 20% more in taxes from retail cannabis sales than from the sale of alcohol products in 2021. 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 (MPP), tax revenues derived from the licensed retail sale of state-legal, adult-use cannabis products grew by more than 30% between 2020 and 2021, totaling over $3.7 billion last year.