A new report released by the Marijuana Policy Project (MPP) reveals that U.S. states have collectively brought in nearly $25 billion in tax revenue from legal recreational cannabis sales since the first markets launched more than a decade ago.
The 2024 fiscal year was particularly significant, setting a new annual record with approximately $4.4 billion generated from adult-use cannabis taxes. This milestone highlights the growing financial impact of legalization at a time when many states are facing budget shortfalls and economic uncertainty.
States Reap Big Returns from Legal Sales
According to the report, seven states collected over $200 million in recreational cannabis taxes last year, and four of those exceeded the half-billion-dollar mark. California alone passed the $1 billion threshold, making it the single largest contributor.
Here’s a look at some of the top-earning states in 2024:
- California: $1,009,294,380
- Illinois: $577,412,683
- Michigan: $523,552,765
- Washington State: $516,558,150
- Massachusetts: $282,963,631
- Arizona: $253,061,173
- Colorado: $237,436,232
Newcomer Ohio, which launched legal sales in 2024 following a successful ballot measure in 2023, generated $16.3 million in its first year. Other recent legal states like Delaware and Minnesota have not yet begun retail sales and were not included in the earnings breakdown.
Cannabis Revenue Now Rivals Alcohol Taxes in Some States
The MPP report emphasizes that while cannabis taxes alone can’t solve state budget challenges, they do offer a meaningful source of funding. In mature markets, adult-use marijuana taxes now make up 0.25% to 1.5% of state budgets, sometimes surpassing the revenue collected from alcohol.
Legalization Brings More Than Just Revenue
Beyond financial gains, the report highlights the social impact of cannabis legalization. Karen O’Keefe, MPP’s director of state policies, stressed that ending prohibition helps reduce arrests, criminal records, and wasted law enforcement resources.
In states where cannabis is legal, more than half the U.S. population now lives in areas where adults can legally use marijuana—for recreation, relaxation, or even to manage common health issues like sleep and pain.
Federal Data Confirms Broader Trend
The U.S. Census Bureau has also been monitoring marijuana tax revenue across states. In its latest update from December 2024, it reported that legal cannabis markets generated over $9.7 billion in taxes since mid-2021. That number continues to grow as new states roll out programs and existing ones expand.
Looking Ahead
With cannabis markets continuing to evolve and more states preparing to launch retail sales, total tax revenue is expected to keep rising. As economic pressures mount, the financial benefits of legalization are becoming harder to ignore, even for states that have yet to act.
While taxes alone won’t balance state budgets, the data shows that regulated marijuana markets are now a significant and growing source of public funding.
Rita Ferreira
Rita is a seasoned writer with over five years of experience, having worked with globally renowned platforms, including Forbes and Miister CBD. Her deep knowledge of hemp-related businesses and passion for delivering accurate and concise information distinguish her in the industry. Rita's contributions empower individuals and companies to navigate the complexities of the cannabis world, and her work remains a valuable resource for those seeking a deeper understanding of its potential.
