Pot Taxes Giving Some States a Revenue High

Pot Taxes Giving Some States a Revenue High

Mario Anzuoni

Taxes on the sale of marijuana are now producing more revenue than taxes on alcohol in the 11 states that legalized commerce in the drug, according to an analysis by the Institute on Taxation and Economic Policy.

Marijuana taxes in those states grew by a third to nearly $3 billion in 2021, ITEP found, while taxes on alcohol sales and liquor store profits came to about $2.5 billion.

California led the pack overall, with $832 million in pot tax revenues, or about twice what the state earned from alcohol. But Colorado saw the largest differential, with its nearly $400 million in pot taxes representing roughly seven times its take from alcohol.

If present trends hold, in the next few years cannabis taxes could surpass tobacco taxes, which have been the largest so-called sin tax on the books. “This is still a small part of state budgets, but it’s a very quickly growing area,” ITEP’s Carl Davis told The Hill. “There aren’t many revenue sources that grow year over year. This has been a several-year trend now. The early states, what you see is revenue start low and grow very, very quickly.”