States are starting to scramble with looming budget deficients, but marijuana is a boon to some – especially one state.
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“Due to a strong cannabis market and effective, efficient regulation of that market,” Amy Moore, director of the Missouri Division of Cannabis Regulation, told The Independent this week, “the funds available for the ultimate beneficiaries of the cannabis regulatory program continue to outpace expectations.”
Funds will help veterans and other key projects. The other benefit is as seen in data from legal states, teen use is down so it frees up some other funds. Legal states are seeing benefits from legal cannabis including lower teen use and crime reduction.
States with legal cannabis are experiencing a significant boost in tax revenue, surpassing those generated by alcohol sales. This trend highlights the economic benefits of marijuana legalization, as cannabis markets expand and mature.
In California, cannabis excise taxes have consistently outperformed alcohol-related taxes, bringing in over double the revenue. Colorado has seen even more striking results, with marijuana tax revenues totaling seven times those of alcohol. Similarly, Massachusetts has collected more tax revenue from marijuana than alcohol since fiscal year 2021, marking a notable shift in state finances.
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Nationally, legal cannabis states generated nearly $3 billion in excise taxes on marijuana in 2021—20% more than alcohol taxes. By 2024, total adult-use cannabis tax revenue exceeded $20 billion, with states like Illinois and Washington reporting record-breaking contributions. Illinois alone collected $451.9 million from cannabis taxes in fiscal year 2022—one-and-a-half times the revenue from alcohol.
The funds are being put to good use. States like Illinois are channeling marijuana tax dollars into mental health services and community programs, while Colorado has invested nearly $500 million into public education. California has allocated millions to nonprofits addressing the impacts of the war on drugs.
This growing revenue stream underscores the potential of cannabis legalization to support vital public services and bolster state economies. As more states embrace regulated marijuana markets, the financial benefits are expected to continue flourishing.
