Proponents of legalizing recreational marijuana argue that, among other things, taxable pot sales would raise a tub of money for the state. But states that have gone down that hazy path are seeing the initial growth in revenue go flat:
Taxing recreational marijuana sales boosts state revenues, but strong initial growth doesn’t last, according to new data collected by the Marijuana Policy Project.
Cannabis supply has eventually exceeded demand in all mature state markets. That has driven down prices and therefore tax collections, which are typically set as a percentage of retail price.
…Colorado’s marijuana-related sales and excise tax revenues have collapsed since 2021, forcing lawmakers to take action to balance the marijuana cash fund.
…According to the Marijuana Policy Project data, marijuana-related tax collections are declining in six states that launched legal sales at least eight years ago: Alaska, California, Colorado, Nevada, Oregon and Washington. Tax collections are plateauing in Massachusetts, Michigan and Illinois, where legal sales began between six and eight years ago.
Revenues are growing in most of the remaining 14 states that legalized more recently. Initial growth in many of those states is more muted than the rapid rise enjoyed by the first states to legalize [Sophie Quinton, “States Can’t Count on Marijuana Tax Revenue Growth,” Arizona Capitol Times, 2026.07.02].
After a series of ballot-measure failures, South Dakota has missed the opportunity to enjoy as much early growth in revenue as it might have had it joined early-adopting states like Alaska, California, and Colorado. If South Dakota marijuana activists take another shot at convincing voters in 2028, and if they can avoid all the legal landmines Republicans have placed in the way of the initiative process, South Dakota will enter a crowded field where the free market has boosted supply, lowered prices, and reduced the ability of state governments to milk marijuana for tax revenue.
No pot to piss on. Where are all those libertarians?
Great argument against legalization in red states, Cory/Grudz.
Although revenues are leveling out, Colorado (the first legal cannabis state), has added to our Treasury $3,166,149,795 collected through March 2026 (latest available).
That’s BILLION with a “B”…
Colorado has used cannabis tax revenue to fund K–12 school construction, school operations, and programs across 15 state agencies, including public health, substance‑use treatment, law enforcement training, and community grants.
What seems to happen is that after the initial glow wears off people find that it’s cheaper to use their old suppliers. The state requires a yearly renewal for medical cards at $75 plus doctor fees for the prescription. The only thing going to a dispensary does for a user is the potency of refined concentrate is out of this world. This is not necessarily a good thing especially for people that partake more heavily than they should. That being said, folks should have the choice to utilize the dispensary if that is their desire.
Deeply blue cities Santa Fe, New Mexico and Missoula, Montana are about the same population.
New Mexico’s capital city ranks exceptionally high for cannabis retail density, with roughly 43 to 45 active licensed dispensaries serving a population of about 89,000 residents. This translates to an estimated 48 to 50 dispensaries per 100,000 residents, or roughly 1 shop for every 2,000 people. A year ago the NM cannabis excise tax reached 13% and will increase 1% each year until July 2030 when it will hit 18% as set in state statute. On Tuesday an interested party paid $65 in Santa Fe for an ounce of flower containing almost 31% THC as competition weeds out the weak.
Missoula also maintains one of the highest concentrations of cannabis dispensaries per capita in the United States, peaking at a reported 30.7 dispensaries per 50,000 residents. State statistics confirm there are 54 active dispensaries operating within Missoula city limits so in February the city council mandated that any new dispensary be at least 1,000 feet away from another dispensary keeping additional location restrictions in place but assured existing dispensaries are grandfathered in under the new rules. Just recently, Missoula enacted a prohibition on new cannabis licenses to address a range of concerns while public health officials suggest the city should have no more than twelve dispensaries based on current population.
Signed into law by Governor Tina Kotek in March, 2024 after lawmakers passed House Bill 4121 Oregon established a strict, permanent population-based cap on new cannabis licenses or a maximum of one license per 7,500 residents.
Santa Fe and Missoula are gems of the West.
PS, grudz. You used to pay $400 for an oz of kind. Remember?
Washington State has a 37% excise tax on cannabis sales so it is struggling to compete with a burgeoning black market so there is that.
https://www.kuow.org/stories/recreational-cannabis-sales-in-washington-state-are-declining/