Cannabis By The Numbers: How Much Money Will States Bring in From Marijuana in 2016?
Nationwide marijuana legalization could produce up to $28 billion in yearly tax revenue a new study found.
Published on May 17, 2016

It’s been a pretty promising start for the marijuana industry across the United States. 

We’re almost halfway through 2016, and marijuana tax collections in Colorado and Washington have exceeded initial estimates.

For instance, Colorado's cannabis industry brought in more than $270 million in the first quarter of 2016 alone.

New analysis from the Tax Foundation found nationwide legalization of marijuana could generate up to $28 billion in tax revenues for federal, state, and local governments.

That includes $7 billion in federal revenue, $5.5 billion from business taxes, and $1.5 billion from income and payroll taxes, the report outlined. 

Colorado's recreational marijuana industry has longtime been the poster child for pot profit. As Washington and Oregon chime in to flaunt tax revenue from marijuana sales, there’s a great chance that other states will start to follow suit.

Alaska and the District of Columbia, where marijuana has been fully legalized for recreational purposes, are also showing strong signs for a profitable year in its new, but fast growing cannabis industry.


Washington state is planning for exponential growth in tax revenue coming from its booming business. 

According to Bloomberg, the state expects to pull in $154.6 million in taxes alone, which they expect to eventually exceed $1 billion after four years.

Last year alone, dispensaries in Washington sold an estimated $257 million worth of marijuana-related products.


Oregon is also seeing positive effects since recreational legalization. The Beaver State has projected the market is worth nearly $300 million.

In January, Oregon began collecting a 25% tax from recreational marijuana sales. In one month alone, marijuana sales from the state's 309 dispensaries were projected to bring in roughly $14 million.

The newly implemented sales tax has assumedly made the state of Oregon extremely pleased, considering that over the month of February they reported a tax revenue of $3.48 million.

These cannabis sales aren’t just filling the pockets of the growers and government either, in some states they are helping a worthy cause.  

For instance in Oregon, 40% of state tax revenue goes toward education, while another 20% is set to help with mental health and drug services. Additonally close to 2,200 jobs will be created in the industry during 2016.

District of Columbia 

The numbers from the District of Columbia are a bit tougher to crunch as the legalization of recreational use there has been met with some criticism and a lot of obstacles.

Although private recreational use was fully legalized back in February 2015, hopeful retailers have been prevented from opening up shop due to blockage from the government, while the legal purchase of cannabis remains not permitted.

This has led to a massive amount of street sales, which are generally quite hard to keep track of.

Locally-based grow operations like Alternative Solutions, which is one of seven facilities in Washington DC authorized to grow marijuana, are starting to see life in this relatively small market, and in three harvests since November 2015, they’ve brought in a revenue of $700,000.


It also seems that new legal framework in California—such as the state’s newly signed Medical Marijuana Regulation and Safety Act (MMRSA)—is helping their medical cannabis industry blossom as well. One California-based cannabis-focused agriculture company called Terra Tech saw a revenue growth of 103% in the first quarter of 2016 alone, bringing in a total revenue of $1.5 million so far this year.

The state of California, which is set to vote on a ballot to fully legalize recreational use in November, is truly the cream of the cannabis crop. Last year, medical dispensaries in California sold a whopping $2.7 billion worth of marijuana-related products, which accounted for almost half of the country’s legal sales.

At this point, for California, it seems that legalization of recreational use is not a matter of ‘if’ but rather ‘when’, as laws slowly become more lax and growers continue to build pot farms in the northern part of state.

Full legalization of recreational use in California would be the true game-changer for the industry. The Drug Policy Alliance estimates that, if California fully legalized and taxed marijuana, they would bring in an annual revenue of $1.4 billion dollars on its own.

National Market

The overall US market is set to expand quite handsomely this year, as a recent report by New Frontier and ArcView Market Research projected the country’s overall marijuana market to reach $7.1 billion by the end of 2016.

Looking further into the future, the Marijuana Business Daily estimtes that the US cannabis industry could be worth $44 billion annually by 2020.

As for the handful of cannabis-related stocks, such as the UK-based GW Pharmaceuticals or Insys Therapeutics, there seems to be an opportunity for profitable investment, as both stocks have shown a steady upward climb as of late.

But it’s important to note that the marijuana stock market can still be extremely volatile, especially as the federal government continues to push back against the efforts for full legalization.

As profitable as the marijuana industry has become across the United States, there are still hundreds of pounds and millions of dollars worth of pot being confiscated by the police on a daily basis around the country.

Last year alone, the DEA destroyed approximately $18 million worth a marijuana plants, which—surprise, surprise—costs federal taxpayers about $950,000.

All the while, states that have medicinally legalized marijuana, such as Michigan, have already seen dozens of dispensary raids to start off 2016.

So, although things are looking optimistic for the marijuana industry overall, it’s important to stay precarious about the continuing drug busts, dispensary raids, and the federal government’s refusal to acknowledge the fact that almost half of the states in the United States have either legalized medicinal or recreational use of marijuana.  

Tyler Koslow
Tyler Koslow is a Brooklyn-based freelance writer with an intensive focus on technology, music, pop culture, and of course, cannabis and its impending legalization.
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