Marijuana legalization could mean millions in tax revenue for Florida, Alaska, and others

States like Alaska, Florida, Oregon and Washington, D.C. could make a combined $3 billion in marijuana tax revenue if they legalize the drug on Nov. 4. Colorado, the first state to allow the sale of recreational marijuana, is expected to take in $60 million to $70 million this year in taxes from legal pot sales, 

David McNew/Reuters/File
Marijuana plants on display for sale at the medical marijuana farmers market at the California Heritage Market in Los Angeles. Marijuana legalization is on the ballot in several states this election, and voting for it could mean millions in state tax revenues.

States such as Alaska, Florida and Oregon stand to collect millions in marijuana tax revenue if they legalize the drug on Nov. 4. That’s when citizens in Alaska, Florida, Oregon and Washington, D.C., will cast their ballots on marijuana initiatives. Across the country, states could gain more than $3 billion in new tax revenue from legal marijuana sales, according to a new analysis by NerdWallet.

Colorado, the first state to allow the sale of recreational marijuana, is expected to take in $60 million to $70 million this year in taxes from legal pot sales, according to the Denver Business Journal. Cash-strapped states stand to collect millions if they legalize the drug. Across the U.S., states could gain just over $3 billion in tax revenue from legal marijuana sales, according to a new analysis by NerdWallet.

What’s your state’s piece of the pie?

Trends and takeaways

  • The U.S. stands to gain, according to our calculations, $3,098,866,907 in state and local taxes per year — that’s more than twice the entire budget of the Small Business Administration in 2013.
  • California could gain the most from taxes on sales of marijuana. The state stands to take in $519,287,052, which almost covers the 2013 budget for the California Department of Parks and Recreation. 


How we sized the marijuana market in each state: Marijuana use is illegal in most states, so it’s difficult to get concrete numbers on the amount of marijuana purchased and consumed. To estimate this value, we used data from the Substance Abuse and Mental Health Services Administration detailing the percentage of marijuana smokers ages 25 and over in each state and multiplied that percentage by the state’s population older than 25 to get the number of users in each state. We then took the state’s users as a percentage of total users over 25 in the U.S. and multiplied that by the total marijuana market estimate (sized at $14 billion by Harvard University economist Jeffrey Miron) to determine the market size in each state.

How we calculated state sales tax revenue: We used state and local tax rates compiled by the nonpartisan Tax Foundation to estimate the amount each state would earn in sales tax revenue. We added in a 15% excise tax (a tax levied on a specific good, such as cigarettes or gas), which is the excise tax in Colorado for marijuana purchases.  For the full formula, see the bottom of this article.

NerdWallet’s estimates are conservative. This analysis doesn’t account for several factors, including:

  1. Variations in excise taxes: Each state will determine its own taxes, but for our calculations, we assumed the same 15% excise tax that Colorado collects across all states.
  2. Reduced spending on law enforcement: We didn’t include the money states would save by not having to enforce laws against the use of marijuana. Miron, the Harvard economist, estimates a savings of $7.7 billion annually nationwide on law enforcement.
  3. Medical marijuana sales: We didn’t deduct the amount of revenue raised in states that have legalized medical marijuana.  The total revenue we calculated for California, for example, includes revenue they already make from medical marijuana sales.
  4. Potential market changes: If marijuana becomes legal for wider recreational use, consumption could increase, which would make our current market estimates low.

How much has Colorado made since legalizing marijuana? In the first six months of this year, the state collected$25,307,067 in taxes on the sales of marijuana. By June 2015, Colorado expects to collect up to $70 million—not very far off from our estimate of $78,157,904.

The post Marijuana Tax Revenue Could Amount to Millions for Alaska, Florida, Oregon and D.C. appeared first on NerdWallet News.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to

QR Code to Marijuana legalization could mean millions in tax revenue for Florida, Alaska, and others
Read this article in
QR Code to Subscription page
Start your subscription today