How Profitable Can Marijuana Legalization Be For Your State

By October 11, 2014Marijuana Laws, US State Laws


On November 4, people of Florida, Washington, Alaska and Oregon will cast their votes on whether or not should marijuana become legal for recreational purposes. Given the popularity of medical marijuana and many years of lobbying for the plant by various marijuana activists, it is highly likely that other states will consider legalization in upcoming elections. According to the Denver Business Journal, Colorado, which was the first state to allow the sale of recreational marijuana, is expected to cash in $60 to $70 million this year in taxes from legal marijuana sales. If you think of the economy and the number of states in desperate need for cash, it’s not that weird many of the states are considering this option. So what’s your state’s piece of pot pie?

Money grows on marijuana plants

If all 50 states legalized cannabis today, they’d be collectively cashing in more than $3 billion a year in taxes – that is a according to NerdWallet, a personal finance site, which made an interesting forecast of annual jackpot for states that legalize the plant. Needles to say that popularity of cannabis is hitting the roof in U.S. NerdWallet projects that California would get the biggest piece of pie – that is, would gain the most from legalization, generating more than $519 million per year. NerwWallet also didn’t forget to point out that amount would almost cover the entire 2013 budget for California’s Department of Parks and Recreation. As we expected, New York would be second, with $248 million in their wallet. There are seven additional states that would bring in $100 million or more per year from legalization, and 25 others would stand to make at least $20 million per year.

Are those numbers legit?

Naturally, because recreational use of marijuana is illegal in almost every state, it is difficult to get precise numbers that will tell the concrete results, so consider these really rough estimates on the amount of marijuana purchased and consumed. To estimate this value, clever folks from NerdWallet used data from the Substance Abuse and Mental Health Services Administration detailing the percentage of marijuana smokers aged 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. Basically, when they calculated the approximate number of pot users in each state, they applied the percentage to the U.S. population and estimated the total U.S. marijuana market at $14 billion. Perhaps you will find interesting the fact that Harvard economist Jeffrey Miron sized the marijuana market at about that same number?

Tax rates may vary

NerdWallet assumed the tax rate of 15% in their prediction, but that is most probably not the outcome in every state. For instance, in Colorado, where recreational marijuana is legal, the tax revenue has been far lower than predicted – about 46 % of what the Colorado Legislative Council predicted before legalization. For the time being, take a look at NerdWallet’s map of the United States to see tax revenues your state might expect from legal, regulated marijuana sales.



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