As more states legalize recreational and medical marijuana, it’s not just consumers who can benefit — states can collect excise tax revenue. And excise taxes — whether paid by retailers, importers, consumers or someone else — add up.
While cannabis excise tax revenue showed a slight dip of 0.6% between 2022 and 2023 nationwide (more on this soon), one state saw a 355.5% sky-high spike in collection.
Here’s what else we found.
- Between 2022 and 2023, cannabis excise tax revenue dipped 0.6% nationally — with a key caveat. In 2023, states collected $2.86 billion in excise tax revenue, down from $2.88 billion in 2022. That said, data wasn’t available in multiple states (such as Nevada, New Jersey and New Mexico) at various points in 2023, which would ultimately have led to an increase.
- Across the states that reported collecting cannabis tax revenue throughout 2022 and 2023, Missouri saw the biggest year-over-year boost. In the Show-Me State, marijuana sales tax revenue jumped 355.5% from $14.79 million in 2022 to $67.36 million in 2023. New York (184.1%) was the only other state where revenue doubled. Louisiana (61.2%) joined the top three.
- Conversely, California saw the biggest drop in cannabis tax revenue between 2022 and 2023. In this period, cannabis tax revenue dropped 20.4%. Colorado (16.0%) and the District of Columbia (14.8%) also saw revenue fall significantly.
- Despite falling tax revenue, California collected more in cannabis sales tax than any state. In 2023, California raked in $567.35 million in related tax revenue. Collections were next highest in Washington ($460.28 million) and Illinois ($278.17 million).
Where is marijuana legal, and how do excise taxes apply?
Recreational cannabis is legal in 24 states and the District of Columbia. Another 13 states have legalized medical marijuana only. (Medical marijuana is also legal in each state where recreational cannabis is legal.) Here’s a breakdown:
- States where recreational (and medical) marijuana is legal: Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon, Rhode Island, Vermont, Virginia and Washington.
- States where only medical marijuana is legal: Alabama, Arkansas, Florida, Hawaii, Louisiana, Mississippi, New Hampshire, North Dakota, Oklahoma, Pennsylvania, South Dakota, Utah and West Virginia. (Kentucky will join this list on Jan. 1, 2025.)
Whether recreational or medical marijuana, states can charge excise taxes — which vary widely based on location. For example, New York charges retailers a 13% tax on adult-use cannabis or 7% on medical-use cannabis.
According to our analysis of U.S. Census Bureau Quarterly Summary of State and Local Government Tax Revenue data, cannabis tax revenue dipped 0.6% nationally from 2022 to 2023, from $2.88 billion to $2.86 billion. Transparency is important, so it’s key to note that Maryland, Nevada, New Jersey and New Mexico had missing data in various parts of 2023, which would have led to an increase.
That said, various factors can impact government-collected tax revenue. As retailers face competitive illegal markets (where cannabis is often cheaper due to a lack of regulation and those hefty taxes), falling wholesale prices and difficulties obtaining operating licenses, many dispensaries may struggle with sales.
According to LendingTree chief credit analyst Matt Schulz, these complications may impact sales, which impact tax revenue. “People spend more when they pay with credit cards, period,” he says. “There’s no reason to believe that marijuana would be any different.”
Tighter budgets may also play a role in changing revenue collection. As consumers struggle with high inflation, many may not be able to make room for legal marijuana purchases.
While medical marijuana has been legal in Missouri since 2018, recreational cannabis is relatively new, approved in November 2022 and legalized in February 2023.
The data backs this. For example, Missouri collected $4.57 million in cannabis tax revenue in the fourth quarter of 2022, which spiked to $10.20 million in the first quarter of 2023 before rising again to $19.32 million in the second quarter of 2023.
And this comes even though cannabis excise taxes in Missouri are fairly low, at 6% on recreational sales and 4% on medical sales. Compare this to a 37% excise tax in Washington and 20% in Montana for adult-use sales.
States with the biggest increases/decreases in cannabis tax revenue
| Rank | State | 2022 cannabis tax revenue | 2023 cannabis tax revenue | Change |
|---|---|---|---|---|
| 1 | Missouri | $14,787,000 | $67,359,000 | 355.5% |
| 2 | New York | $11,774,000 | $33,453,000 | 184.1% |
| 3 | Louisiana | $616,000 | $993,000 | 61.2% |
| 4 | Michigan | $190,606,000 | $270,376,000 | 41.9% |
| 5 | Montana | $35,781,000 | $49,352,000 | 37.9% |
| 6 | Maine | $27,350,000 | $33,770,000 | 23.5% |
| 7 | Arizona | $151,427,000 | $176,244,000 | 16.4% |
| 8 | Massachusetts | $157,796,000 | $168,110,000 | 6.5% |
| 9 | Pennsylvania | $34,061,000 | $33,699,000 | -1.1% |
| 10 | Illinois | $284,731,000 | $278,165,000 | -2.3% |
| 11 | Oregon | $174,071,000 | $169,434,000 | -2.7% |
| 12 | Arkansas | $15,757,000 | $15,143,000 | -3.9% |
| 13 | Washington | $484,009,000 | $460,279,000 | -4.9% |
| 14 | Alaska | $29,949,000 | $28,252,000 | -5.7% |
| 15 | Oklahoma | $54,696,000 | $51,014,000 | -6.7% |
| 16 | District of Columbia | $2,313,000 | $1,971,000 | -14.8% |
| 17 | Colorado | $313,242,000 | $262,991,000 | -16.0% |
| 18 | California | $712,405,000 | $567,354,000 | -20.4% |
Source: LendingTree analysis of U.S. Census Bureau Quarterly Summary of State and Local Government Tax Revenue data. Note: Recreational marijuana isn’t legal in Louisiana, Pennsylvania, Arkansas and Oklahoma, meaning data is from medical marijuana. Similarly, Congress limits the District of Columbia from taxing recreational marijuana, so data is also from medical marijuana.
New York followed, with excise tax revenue jumping from $11.77 million in 2022 to $33.45 million in 2023. At a 184.1% jump, that makes it the only other state where revenue doubled. Like Missouri, New York has had legal medical marijuana for years, but the state recently legalized recreational marijuana, with sales beginning at the end of 2022. After a slight dip to $2.74 million in the first quarter of 2023, tax revenue jumped to $6.01 million, $9.92 million and $14.78 million in the next three quarters, respectively.
Louisiana rounded out the top three, with excise sales tax revenue jumping 61.2% from $616,000 in 2022 to $993,000 in 2023. While recreational cannabis isn’t legal in Louisiana, medical marijuana was again approved in 2015. Regulatory authority changed in mid-2022, which could have impacted this change.
Conversely, California saw the biggest drop in cannabis excise tax revenue, falling 20.4% from $712.41 million in 2022 to $567.35 million in 2023. On Jan. 1, 2023, California made a significant change, requiring retailers to collect and pay the state’s 15% excise tax rather than distributors.
Colorado and the District of Columbia followed, with tax revenue dropping 16.0% and 14.8%, respectively.
Additionally, a nationwide boom in cannabis grow operations means sales prices have plummeted, which affects revenue — and, therefore, tax revenue.
Although the Golden State saw cannabis tax revenue fall the most, California is still king when it comes to the states with the highest tax revenue. In 2023, California saw $567.35 million in excise tax revenue from cannabis — the only state with more than half a billion in related revenue.
As the nation’s most populous state, it’s unsurprising that it ranks first here. Additionally, access is easy — a quarter of the nation’s marijuana dispensaries are in California, according to Pew Research Center.
States that collected the most in cannabis tax revenue, 2023
| Rank | State | 2023 cannabis tax revenue |
|---|---|---|
| 1 | California | $567,354,000 |
| 2 | Washington | $460,279,000 |
| 3 | Illinois | $278,165,000 |
| 4 | Michigan | $270,376,000 |
| 5 | Colorado | $262,991,000 |
| 6 | Arizona | $176,244,000 |
| 7 | Oregon | $169,434,000 |
| 8 | Massachusetts | $168,110,000 |
| 9 | Missouri | $67,359,000 |
| 10 | Oklahoma | $51,014,000 |
| 11 | Montana | $49,352,000 |
| 12 | Maine | $33,770,000 |
| 13 | Pennsylvania | $33,699,000 |
| 14 | New York | $33,453,000 |
| 15 | Alaska | $28,252,000 |
| 16 | Arkansas | $15,143,000 |
| 17 | District of Columbia | $1,971,000 |
| 18 | Louisiana | $993,000 |
Source: LendingTree analysis of U.S. Census Bureau Quarterly Summary of State and Local Government Tax Revenue data. Note: Recreational marijuana isn’t legal in Oklahoma, Pennsylvania, Arkansas and Louisiana, meaning data is from medical marijuana. Similarly, Congress limits the District of Columbia from taxing recreational marijuana, so data is also from medical marijuana.
Washington followed, earning $460.28 million in cannabis tax revenue. As one of the first states to legalize recreational marijuana, its solid foundation in the industry likely plays a role in high tax revenue here. Illinois ($278.17 million) rounded out the top three.
Conversely, Louisiana ($993,000), the District of Columbia ($1.97 million) and Arkansas ($15.14 million) saw the lowest cannabis excise tax revenue in 2023, though data for all three is based solely on medical marijuana sales.
The U.S. Drug Enforcement Administration (DEA) — according to the Associated Press — plans to reclassify marijuana as less dangerous. If this occurs, more consumers may be comfortable with legal recreational or medical marijuana, pushing tax revenue higher.
If you’re an adult living in a state with legal marijuana or plan to visit one, you may struggle with high dispensary prices, especially in states with high excise taxes. For those struggling, Schulz — author of “Ask Questions, Save Money, Make More: How to Take Control of Your Financial Life” — recommends the following:
- Don’t be embarrassed to budget for it. “Everyone has their passions, and if your passion is costly, it makes sense to create a line item for it in your budget,” he says. “It may seem weird to do it for marijuana, but it shouldn’t. Take the time to track your spending and make room for it in your budget. That way, you can pursue your passion with fewer worries about what it’s doing to you financially. Plus, if you overdo it a little bit for a month or two, you’ll know and be able to make adjustments.”
- Shop around (legally). With any product, different vendors may have different prices for any number of reasons. That’s likely true with dispensaries. Of course, only buy from a licensed dispensary.
To rank the states where cannabis excise tax revenue changed the most, LendingTree researchers analyzed U.S. Census Bureau Quarterly Summary of State and Local Government Tax Revenue data.
Specifically, researchers calculated how much a state collected in tax revenue for each quarter in 2022 and 2023. (We only included states in which data was available for each of the eight quarters.) Researchers then added the quarterly data to compile full-year figures and ranked the states by percentage change between 2022 and 2023.
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