New Interactive Federal Map Shows How States Rely On Marijuana Tax Revenue To Fund Public Services

October 12, 2023 · marijuanamoment.net

A new map published by the U.S. Census Bureau details the proportion of state revenue made up by marijuana tax money, and in some cases, the figures are eye-popping.

In Oregon, for example, roughly $1 in every $20 the state made during some recent time periods came from legal cannabis transactions. According to the federal data, marijuana taxes comprised 4.67 percent of Oregon’s total revenue in the first quarter of fiscal year 2023, 4.7 percent in the first quarter of 2022 and 5.21 percent in the third quarter of 2021.

While Oregon by far relied heaviest on marijuana tax dollars, other states—including Michigan, Illinois, Alaska and Colorado—consistently saw marijuana revenue make up at least 1 percent of state income over the past two years.

The data covers the third quarter of fiscal year 2021 through the second 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.

During the most recent quarter for which data is available, which accounts for sales through the end of December 2022, more than 3 percent of Oregon revenue came from legal cannabis. In Michigan and Illinois, the marijuana sector made up more than 2 percent of total revenue, while Alaska and Colorado made just over 1 percent of revenue from cannabis. Arizona and Missouri, meanwhile, saw between 0.5 percent and 1 percent of tax money come from cannabis.

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 fiscal year that 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.

The interactive map also allows sorting by the amount of change in state marijuana tax revenue from quarter to quarter. In the second quarter of fiscal year 2023, states such as Mississippi, Connecticut and New York saw cannabis tax revenue double from the previous quarter, while California, Missouri and Maine saw between 60 percent and 90 percent revenue growth. Massachusetts, meanwhile, observed a 33.4 percent decrease in cannabis tax revenue.

While not every state with legal marijuana provided data for the new map, the project nevertheless represents the federal government’s growing effort to account for the size and scope of the legal cannabis industry. The Census Bureau describes the accounting as a “new data product,” and it includes the collection and publication of cannabis-related economic data from both public and private sectors.

Late last month 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, a figure it intends to update quarterly going forward. Census 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 separate note 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. It’s not clear whether the totals in the new report include sales tax figures alone or revenue from both categories. A Census spokesperson didn’t immediately respond to a request for clarification this week.

The agency 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.”

Aaron Smith, executive director of the National Cannabis Industry Association, told Marijuana Moment earlier this week that he welcomed Census’s acknowledgement of the sector’s economic contribution. “This data highlights the fact that legal cannabis markets are making positive contributions to their communities,” he said. “However, we still aren’t even close to reaching our full potential to replace criminal markets with tax-paying, regulated businesses.”

Notably, the current Census Bureau reporting period does not include the bulk of sales from this year, during which some states have broken monthly sales records multiple times.

In Illinois, for example, officials recently touted the industry’s “unprecedented growth” in fiscal year 2023, with regulated stores selling more than $1.5 billion in marijuana products. In September, stores in the state sold more individual cannabis products than during any prior month. Tax revenue, however, dropped in fiscal year 2023, falling to $420.9 million from a record $435.1 the previous year. As in past years, Illinois made significantly more revenue from cannabis than from alcohol, which brought in about $316.3 million during the same period.

Connecticut, meanwhile, tallied more than $25 million in total sales in September, besting a record set the previous month.

Licensed retailers in Maryland, sold a record amount of adult-use cannabis products in September although medical marijuana sales fell.

In New Mexico, monthly sales in September narrowly missed a monthly sales record set in August as the state crossed the half-billion-dollar mark in total adult-use sales.

August was also a record-setting month in Rhode Island, which sold its highest amount of cannabis for the fourth consecutive month, notching $9.7 in monthly receipts.

Purchases of adult-use cannabis in August also broke a record ($23.7 million) in Montana, state officials reported, although medical marijuana sales were at their lowest ($5.0 million) since recreational markets opened early last year.

In Maine, too, marijuana sales reached a record high in August, with nearly $22 million worth of purchases, according to recent data from the state Office of Cannabis Policy (OCP).

Early last month, Massachusetts officials reported that retailers have now sold more than $5 billion in adult-use marijuana since the state’s recreational market launched five years ago. Sales reached $139.3 million in August alone, with the year-to-date total at $1.05 billion within the first eight months of 2023.

Michigan marijuana sales also reached another record high in July, with nearly $277 million worth of cannabis sold.

In Missouri, meanwhile, retailers have been selling about $4 million worth of marijuana per day on average since the state’s adult-use market opened up in February—and the state saw a record $121.2 million in cannabis purchases in June. (Full Story)

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