Adult Use Cannabis Taxes Surpass $10 Billion
Adult Use Cannabis Taxes Surpass $10 Billion
Adult use cannabis sales have generated over $10 billion USD in tax revenue…
Marijuana Policy Project (MPP) is reaffirming what we know to be true: cannabis is very good for business with states having collected an astounding $10.4 billion USD in adult use cannabis sales taxes since 2014.
With all of this tax revenue, the question remains — where are these billions of dollars in new taxation revenue being spent?
Thankfully, the Marijuana Policy Project has compiled the data to answer this important question & in today’s edition we will be breaking down how these dollars are being spent in Colorado and California.
Colorado, 5.75 million people
In 2014, Colorado became the first state to legalize cannabis for adult use purposes.
Since then, Colorado has inadvertently acted as a guide for the rest of the nation, and perhaps the rest of the world to follow.
When it comes to taxing cannabis, Colorado has a 15% wholesale and 15% special retail tax on adult use cannabis sales.
Together, these two taxes have allowed the state to generate over $368 million USD in adult use cannabis tax revenue from January – November 2021, a roughly 155% increase from 2014’s “humble”, $46 million USD in annual tax revenue.
Since the first adult-use cannabis product was purchased in 2014, Colorado has generated over $1 billion USD in adult use cannabis taxation revenue.
How are these dollars spent?
Colorado’s public school systems have received $471.9 million of the state’s cannabis revenue as of November 2021.
We found: Colorado’s Building Excellent Schools Today (BEST) Capitol Construction fund received $312 million in cannabis tax revenue, divided into $78 million annual payments through June 2023.
BEST provides grants to public schools who need construction work and technical assistance & it’s amazing to see cannabis taxation revenue going to such a worthy cause in Colorado.
California, 39.51 million people
California’s first legal, adult use cannabis product wasn’t sold until 2018.
Nonetheless, it’s already the largest legal cannabis market in the world today, having collected $3 billion in cannabis retail tax revenue since 2018.
Not even the corona-virus pandemic slowed The Golden State’s cannabis industry down. Tax revenue increased 62% from 2019 to 2020, with California collecting more than $1 billion in 2020 alone.
From January to September 2021, California’s total tax revenue from adult cannabis sales reached $978M, despite the fact that 68% of California’s municipalities don’t allow cannabis retail stores.
How are these dollars spent?
Youth centers, substance abuse treatment and prevention, education, cannabis research, environmental programs, and more all received dollars from cannabis tax revenue.
Here’s What We Found: California awarded approximately $29 million of this revenue to 58 non-profit organizations that help repair damage caused by the War on Drugs, which is once again amazing to see!
- $2 million USD goes to the UC San Diego Center for Medical Cannabis Research every year.
- Public California universities to receive $10 million per year for 11 years to study Proposition 64 (California’s adult-use cannabis bill).
- $3 million every year, for five years, goes to the Department of the California Highway Patrol to create protocols that determine intoxication from cannabis.
California & Colorado are far from perfect when it comes to cannabis.
That said, it’s fantastic to see a large portion of these tax dollars going towards the improvement of both our education system & medical cannabis research.
Cannabis Social Equity Policies In New York 🍏
Breaking down Gov Kathy Hochul’s decision to invest in cannabis social equity…
New York’s Governor Kathy Hochul has released New York’s 2022 State of the State, her first as governor of the state.
In it, she detailed her plans for a $200 million fund to promote social equity in the cannabis industry, alongside a rather blunt statement:
“New York will lead where many other states have fallen short.
The Governor is focused on providing more than basic business support and training for our future cannabis entrepreneurs…”
Ouch. It’s no secret that social equity programs across the U.S. have failed to impress most of the cannabis industry, including those it’s supposed to benefit.
(Governor Kathy Hochul)
In fact, The California Cannabis Industry Association recently released an accountability report explaining just that.
Here are some key takeaways:
- Only 26 out of the 200 identified social equity applicants in Los Angeles have received temporary approval, as of October 2021
- Mendocino County requires most applicants to be “low income” or “very low income” to qualify for social equity grants, making between $20,000-$50,000 annually. Many social equity applicants in Mendocino exceed the income limits for eligibility.
- 90% of respondents in an Oakland conducted social equity survey said lack of capital is a major problem in their business.
New York’s State of The State report goes on to say “…this fund will provide direct capital and startup financing to social equity applicants as the State takes meaningful steps to ensuring that New York’s cannabis industry is the most diverse & inclusive in the nation.”
That’s a bold claim, and it doesn’t stop there.
The social equity fund will help New York achieve its goal to award 50% of all licenses to equity applicants, per the recently-released memo.
Legal Cannabis Tourism
Breaking down the impact legal cannabis tourism can have on economies….
29% of leisure travelers in the U.S. are interested in cannabis activities on vacation, but before breaking this down — let’s start in the Netherlands.
Cannabis Tourism In Amsterdam
Amsterdam is arguably the cannabis capital of Europe, and its coffee shops are known around the world for selling some of the best buds.
While these loose laws are great for tourists interested in trying cannabis — the Amsterdam-focused report went so far as to call for a ban on tourists from visiting these coffee shops.
According to local lawmakers, there are no plans to ban tourists from visiting Amsterdam’s cannabis-friendly joints, but there are efforts in place to make them “less attractive and reduce tourist nuisance.”
Cannabis Tourism in The U.S.
As things stand, the United States currently leads the way in cannabis tourism worldwide — and this cannabis tourism continues to benefit both the communities, the governments, and the cannabis consumers in these regions.
Medical Patients and Vacations
Many medical patients are also choosing to vacation in states with medical reciprocity so they can legally access their medicine.
This brings in additional revenue, too, as state governments charge patients up to $200 to apply for a temporary medical cannabis card.
Vacation rental owners are even taking notice and establishing 420-friendly accommodations like Colorado’s Skol Ranch.
We Found: The Republican State of Montana released an amazing report in 2020 that details the market and tax revenue potential from adult cannabis tourism.
Here’s the predictions:
- The number of cannabis tourists in Montana will grow from 6% to 15.5% of all tourists from 2022 – 2026.
- Annual tax revenue from cannabis tourism is estimated to grow from $6 million USD in 2022 to $17 million USD by 2026, courtesy of the number of cannabis tourists growing from 300K to 850K from 2022 – 2026.
What do tourists want?
1) Understanding Seed to Sale
Cannabis retail tours, cultivation tours, manufacturing tours – you name it, Americans want to see it.
It’s been harder to make such tours happen since COVID-19 brought the world to a standstill, however, they are coming back in style to see where America’s most beloved cannabis is grown, processed, and sold.
2) Puff, Pass, and Paint
Puff Pass and Paint is a cannabis-friendly art class, encouraging you to relax and puff along to step-by-step instructions for creating a gorgeous painted masterpiece. No previous art experience required.
It started in Denver, but now there are locations in California, Arizona, Washington D.C., Oregon, Nevada, Massachusetts, Illinois, and New York.
The success of the legal cannabis industry in the U.S continues to amaze us.
The amount of taxation revenue generated in each state, and the love for cannabis tourism is exciting, and we are also ready to see how New York lives up to its claim of being the most inclusive and diverse cannabis industry in the entire nation.
Many people believe California’s social equity industry is filled with broken promises and impossible criteria, so New York has the perfect chance to help establish equity business owners in the state and earn their trust forever.
We think more states should consider medical reciprocity for interstate tourists in the United States such that medical cannabis patients can access their medicine when taking vacations in other states, without the threat of jail time.