Washington State and Colorado got more tax revenue from cannabis than from alcohol or cigarettes in fiscal year 2022, according to a new report published by the Tax Policy Center.
Washington State collected $517 million in tax dollars, in comparison to $490 million generated from alcohol and $380 from cigarettes.
Meanwhile, Colorado gathered $353.7 million in cannabis taxes – seven times more than what was generated from alcohol.
What’s more interesting, tax revenue significantly declined in both Colorado (14%) and Washington (7%) from the previous year.
The analysis contains a full overview of the revenue data, tax models, and most effective tax regimes in states where cannabis is legalised.
A quote from the report reads:
“Broadly speaking, the experience of Colorado and Washington demonstrate that a state can collect a significant amount of revenue from marijuana taxes and that collection should mostly increase over time.”
Common theme
Alongside Washington and Colorado, eight other US states have found cannabis taxes outperform cigarettes.
An interesting report by the Institute on Taxation and Economic Policy analysed 11 cannabis-legal states and found that “cannabis revenues outperformed alcohol by 20 percent” on average.
Nevada, for instance, also brought in more tax revenue than both alcohol and tobacco.
More examples include states like Arizona, where legal cannabis sales generated more tax revenue than tobacco and alcohol combined in March this year.
Illinois also collected $100 million more in cannabis taxes than alcohol in 2021.
More evidence for the UK to follow suit?
Many advocates and stakeholders not only understand the huge economic opportunity that legalisation brings, but they also hope that providing easy access to regulated cannabis could see a decline in people using more dangerous drugs.
Earlier this year, a study found a decrease in alcohol, nicotine, and non-prescription opioids among adolescents after the legalisation of cannabis.
Furthermore, two separate polls conducted this year found that twice as many American think that cannabis has had more of a positive impact on consumers than those who say the same about alcohol.
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