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Federal Census Bureau Updates Marijuana Tax Revenue Map, Showing Which States Had Biggest Increases And Decreases Last Quarter

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Since the U.S. Census Bureau first launched a map detailing the proportion of state revenue made up by marijuana tax money last fall, the agency has continued tracking the data, allowing further comparisons to be made over time.

In the fourth quarter of 2023, for example, New York recorded about $14.8 million in excise tax on marijuana sales, making up a comparatively slim 0.02 percent of the state’s total tax revenue for the quarter. That’s an increase, however, of 49 percent compared to the preceding quarter—an indication of the potentially massive New York market still slowly getting off the ground after stores began opening there just over a year ago.

In Colorado, meanwhile—the first U.S. state to open retail cannabis stores to adults in 2014—marijuana tax revenue comprised 1.23 percent of all state tax revenue, at $61.0 million. That amounted to a 9.05 percent decrease from the previous quarter in the relatively mature marijuana market.

 

Recent standouts in terms of change include Connecticut, which saw more than a 150-percent increase in tax revenue between the most recent two quarters of available data, as well as Rhode Island and Washington, D.C. The latter two jurisdictions each saw excise tax receipts fall by more than 44 percent.

It’s not clear from the national-level Census map to what extent individual state reporting practices might affect the quarter-to-quarter comparisons.


As for how much of each state’s overall tax revenue stems from cannabis sales, those with the largest shares in Q4 of 2023 were Washington State (1.37 percent), Alaska (1.32 percent), Colorado (1.23 percent) and Montana (1.09 percent). Those with the smallest proportions included Rhode Island (0.10 percent), Pennsylvania (0.07 percent), New York (0.02 percent), Mississippi (0.01 percent) and Louisiana (0.01 percent).


The data now cover the third quarter of fiscal year 2021 through the fourth quarter of the 2023 fiscal year, although the bureau has said that the sales data it reports for a given quarter typically reflects revenue that states collected on sales made during the prior quarter.

While the revenue is just a small fraction of overall state tax revenues, the billions of dollars flowing into state coffers represent an outsized contribution from the sale of a single crop. In Illinois, revenue from the state’s legal marijuana industry was $451.9 million during the most recent full fiscal year, which ended June 30. That’s nearly one-and-a-half times the $316.3 million Illinois made in alcohol taxes during the same period.


In fiscal year 2022, both Colorado and Washington received more tax revenue from legal cannabis than from alcohol or cigarettes.

While not every state with legal marijuana has consistently provided data for the Census Bureau’s map, the project nevertheless represents the federal government’s growing effort to account for the size and scope of the legal cannabis industry.

Last September, before launching the interactive map, the agency published a report showing that legal cannabis states had collected more than $5.7 billion in marijuana tax revenue over an 18-month period. It also recently updated its survey of private businesses to better capture marijuana-related economic activity.


Together, the new tracking and reporting efforts—which come nearly a decade after the first state-legal sales of adult-use cannabis in the United States—indicate an increasing willingness by the federal government to acknowledge the billions of dollars in annually economic activity as the result of state-level marijuana legalization, even as the substance remains federally illegal.

The new state tax revenue data used to build the infographics “result from a complete canvass of all state government agencies,” the bureau said in a note last year about its survey methodology. While it refers to the revenue as “quarterly cannabis excise sales tax collections,” it also says that “taxes” are defined rather broadly.


“For this dataset, the concept of ‘taxes’ is comprised of all compulsory contributions exacted by a government for public purposes,” Census said. “Tax revenue is further defined to include related penalty and interest receipts of a government but to exclude protested amounts.”

The bureau has two separate tax codes for marijuana revenue that it asks states to report, one for taxes on cannabis transactions and another for business license fees.

The agency has said its own figures might not align perfectly with state-reported data “because the Census Bureau may be using a different definition of which organizations are covered by the term, ‘state government.’” The bureau’s definition, it explains, “refers not only to the executive, legislative, and judicial branches of a given state, but it also includes agencies, institutions, commissions, and public authorities.”


Some states have recently seen milestones in marijuana sales numbers, including Massachusetts, which recently recorded more than $7 billion in combined medical and recreational sales since adult-use stores opened there in late 2018.

New Mexico officials also celebrated a new milestone for the state’s marijuana industry, with retailers recording more than $1 billion in total sales since the launch of the state’s adult-use cannabis market in 2022.


Meanwhile more than half a dozen states broke monthly sales records last December, with many relatively new adult-use cannabis markets continuing to expand and American shoppers in general stepping up holiday spending.

The multinational investment firm TD Cowen said last month it projects legal cannabis sales will reach $37 billion in 2027, up from what it said was about $29 billion in 2023. At least some of that growth is expected to come from increased substitution of cannabis for alcohol, particularly among younger adults.



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