The young but fast-growing state-legal cannabis industry has proven to be quite a lucrative space. While opponents of cannabis reform offered a slew of reasons against legalizing cannabis such as increased drug use and criminal activity, statistics have proven them wrong. Not only has legal adult-use cannabis created more than 200,000 new job opportunities, becoming one of the fastest-growing job markets in the country, but it has also provided states with billions of dollars in tax revenue.
According to a recent report from the Marijuana Policy Project (“MPP”), recreational cannabis has earned states close to $8 billion in tax revenue since adult-use sales began in 2014. To arrive at this figure, MPP studied 18 states with legal recreational cannabis markets, looking closely at their tax structures and revenue streams since they launched recreational cannabis sales. Although seven of these states have yet to launch sales of adult-use cannabis, the MPP concluded that cannabis provides a steady and growing stream of revenue for states that have legalized recreational marijuana.
In 2020 alone, taxes from cannabis sales earned states with legal markets around $2.7 billion, helping to beef up their coffers as other industries struggled to survive amid the coronavirus pandemic and subsequent lockdowns. Some states are home to insanely lucrative cannabis sectors, with states such as California earning more than $1 billion from cannabis sales in 2020.
Illinois, which launched its recreational marijuana market in January 2020, has been consistently breaking monthly sales records and is poised to take in a whopping $1 billion in cannabis tax revenue this year after only two years of legal sales. In fact, Illinois’ legal cannabis sector has proven so profitable that last quarter cannabis earned the state more tax revenue than alcohol for the first time. However, the report from MPP did not include local taxes that may be imposed by municipalities. In Denver, for instance, residents have to pay an extra 5.5% tax, raising hundreds of thousands of dollars for the city.
The funds generated from adult-use cannabis sales have been directed toward various causes, MPP says. Colorado, home to one of the country’s most profitable cannabis markets, has invested $404.5 million in its public school system, while California has earmarked $100 million in cannabis tax revenue for communities that suffered the brunt of the decades-long war on drugs. In Oregon, 40% of marijuana tax dollars goes to public education while 25% is used to fund programs that support mental health treatment.
Different segments of the cannabis industry, such as the segment of cannabis-infused drinks, are growing at different rates as the cannabis industry matures, and that means that the sales recorded by manufacturers such as BevCanna Enterprises Inc. (CSE: BEV) (OTCQB: BVNNF) (FSE: 7BC) and others are set to grow over the foreseeable future. With that growth comes more taxes.
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