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Cannabis Had Highest Tax Revenue in Colorado and Washington Over Alcohol, Cigarettes

The Tax Policy Center has released a new report that shows Colorado’s cannabis tax revenues were seven times greater than those of alcohol. Washington, on the other hand, earned $559 millions from marijuana-related taxes. These states have the largest tax revenue, but marijuana sales were higher than other common taxable vices. This new data on marijuana tax revenues shows that the US cannabis market continues to grow, with regular outpacing those of alcohol and cigarettes. 

Although experts believe the cannabis industry’s high taxes will not be sustainable for long, the state population could benefit from the positive health effects. Which states use that tax money and how do they spend it? What does the future hold for those states which collect tax on legal pot?

The State’s Revenue is Increased by Cannabis Tax

Nineteen states have currently passed cannabis tax legislation. It helps increase state funding as well as reduce the black market. Even though marijuana sales have brought in high tax revenues, legalization of cannabis is not moving fast enough to make it a reality for more than half the US. Because marijuana is not subject to federal regulation, states can decide how to allocate taxes and what tax structure they want. 

State funds also include alcohol, cigarettes, and gas taxes. However, federal agencies manage them. Because of a lack regulation, the different states have different taxes for marijuana. Some also levy multiple taxes on recreational or medical products. 

There are currently three marijuana tax structures that exist in America. One tax is based upon the percentage of the cost of marijuana, and others are based on the weight of the cannabis or its potency.  Many states allocate this money by law to specific programs. Other states add the money to other tax revenues for operations or public health programs.

The Effects of a Increasing Cannabis Sales

These are just a few of the important issues that have been raised in discussions about marijuana legalization. Legalized states not only make substantial revenue from marijuana sales but also show a decrease in the consumption of other substances like alcohol and cigarettes.

A Florida study also found interesting results about medical marijuana. Medical marijuana users are less likely than others to resort to opioids to manage pain. Others indicated that cannabis helped with symptoms such as anxiety, chronic pain, PTSD and chronic pain.

The number of car accidents has increased in states that have legalized marijuana. Canada was second to legally legalize pot, with the same trend across the border. Canada’s legalization of marijuana has caused car insurance rates to rise. There is also a lack understanding about the effects of driving while under the influence on the rates paid by medical marijuana patients. The evidence suggests that car insurance rates will fall as more law enforcement considers marijuana users who drive under the influence.

Look Forward

What does it look like in states that are moving towards legalizing marijuana? Colorado and Washington, which have the two most established cannabis markets in the United States, are both great examples. This shows that legal cannabis taxes can be a significant part of a state’s total revenue. 

While prices for cannabis by weight have been declining, evidence suggests that marijuana use will increase in the future, which would help to eliminate the harmful and expensive effects of smoking and alcohol.