DENVER, June 14 (UPI) -- Colorado's Gov. Jared Polis announced this week that his state, which started selling retail recreational marijuana in 2014, had generated $1 billion in tax revenue from pot in just five years.
For a number of states, taxes on marijuana sales have been a boon to coffers -- something that wasn't envisioned all that long ago, when pot dealers operated in secrecy and cash changed hands under the table.
"The cannabis industry in Colorado is thriving. ... We want Colorado to be the best state for investment, innovation and development for this growing economic sector," Polis tweeted. Colorado had 2018 marijuana tax revenue of $266 million and has earned $111.6 million so far in 2019, according to the state's department of revenue.
Among the 11 U.S. states that have legalized the sale of recreational marijuana, tax revenues keep rising. The recreational pot tax money they collected in fiscal 2018 topped $1.1 billion, state revenue departments show.
The top-earning marijuana tax revenue state in 2018 was California, which generated $345 million since legalizing marijuana sales in January that year. Washington state collected $319 million in 2018 and passed the $1 billion mark last year after sales started in July 2014.
Recreational marijuana in 2018 generated $94.4 million in taxes in Oregon, where sales began in 2015, and $69.8 million in Nevada, which first allowed pot sales in 2017.
Alaska, which allowed selling recreational marijuana in 2016, brought in $10.8 million in 2018. Massachusetts, where recreational weed has been legal only since November, generated $5.2 million in taxes in fewer than two months.
States use a variety of taxing mechanisms to collect revenue on the sale of marijuana, including excise taxes, special sales taxes, taxes on gross sales and taxes by weight of product sold.
California collects a state excise tax of 15 percent per sale on top of a general sales tax. Local municipalities are allowed to skim off their own taxes on rec marijuana sales, that can run between 2.5 to 18 percent.
Washington levies a 37 percent sales tax on marijuana products, while Colorado collects both a 15 percent excise tax and a 15 percent sales tax. Alaska charges a tax of $50 per ounce, according to a 2019 analysis by the Tax Foundation.
Two states that have legalized recreational marijuana within the past year, but do not have sales yet, are Michigan and Illinois. Still, they still generated 2018 tax revenue from medical marijuana sales at $18.2 million and $2.4 million, respectively.
Washington, D.C., Maine and Vermont have also legalized recreational pot, but did not collect taxes in 2018.
More than 30 states have passed laws allowing the sale of medicinal marijuana. Taxes collected on the medical product are significantly lower than recreational pot.
Several states did not collect tax on medical marijuana in 2018 including Arkansas, Connecticut, Washington, D.C., Delaware, Florida, Hawaii, Louisiana, Maryland, Minnesota, Missouri, New Hampshire, North Dakota, Ohio and Utah.
Following are the revenue numbers for states that taxed medical marijuana in 2017-2018.
- Arizona - $22.4 million in 2018
- Montana - $1.8 million in 2018
- New Jersey - $1.9 million in 2017
- New Mexico - $9 million in 2018
- New York - $2.6 million in 2018
- Oklahoma - $70,000 in 2018
- Pennsylvania - $2 million in 2018
- Rhode Island - $2.7 million in 2018
Although legalization of recreational marijuana might be seen as a tax windfall, taxes generated are a very small percent of any state's budget.
In Colorado, pot taxes represent less than 2 percent of the total state budget, and about 71 percent of marijuana taxes collected go back into policing and regulating the industry, according to the state's fiscal reports.
The industry has brought jobs to Colorado where almost 3,000 licensed marijuana businesses flourish and more than 41,000 people are licensed to work in the industry, the governor said. Since retail marijuana became legal, Colorado shops have sold $6.7 billion worth of marijuana products, the revenue department said.
As for the $1 billion tax revenue milestone, Polis said in a statement, "This industry is helping grow our economy by creating jobs and generating valuable revenue that is going toward preventing youth consumption, protecting public health and safety and investing in public school construction."