Legalized cannabis has the potential of bringing millions of tax dollars to a state’s budget. In a recent analysis, Colorado and Washington have garnered a combined $200 million dollars in taxes on medical and recreational cannabis sales. Those numbers do not even include the funds made available from sales tax, industry fees and licensing costs.


Many news outlets pounced on the story, highlighting the enormous tax revenue that could be made available if other states choose to legalize and regulate cannabis. The amount of money seems to be the star of the story, but those familiar with the allocation of tax revenue from cannabis warn that sensational tax profits should not be the foundation of cannabis legalization.

Allocating Cannabis Tax Revenue

Colorado estimates that it accumulated over $117 million dollars from recreational and medical cannabis sales, and Washington has calculated over $83 million in tax revenue. While these numbers are impressive, they are only fractions of the multi-billion dollar annual budgets required for each states’ operations. In fact, both states wrote their cannabis legislation to allocate the funds for further research and cannabis education for youths.

“The big lesson we tell other states is you probably shouldn’t legalize marijuana if you want to make money — that’s not why you do it… You do it because you think that a regulated marketplace might be safer than an unregulated marketplace or you believe that the war on drugs didn’t work.”

– J. Skyler McKinley, deputy director of Colorado Gov. John Hickenlooper’s (D) Office of Marijuana Coordination.

California Legalization: Consider the Children

California is expected to see a cannabis legalization measure on the 2016 ballot, and it is encouraging that legislators in America’s cannabis mecca have taken this message to heart. Lieutenant Governor Gavin Newsom’s Blue Ribbon Commission report, released earlier this year, calls for any future California cannabis legislation to keep in mind the importance of youth education and prevention of increased exposure.


The Blue Ribbon Commission calls for legislation to be authored to “capture and invest tax revenue through a fair system of taxation and regulation, and direct that revenue to programs aligned with the goals and needed policy strategies for safe legalization.” These goals are public safety, youth education, and creating a sustainable regulation system.


Another main point is that if California were to set up cannabis legalization to maximize tax revenue from cannabis sales, the success of that legislation would hinge upon maximum cannabis use, which threatens the chance of exposing youths to cannabis before they are educated.

Spreading the Message of Sensible Cannabis Legislation

As cannabis legalization moves forward across the country, it is important that all states adopt the mindset of creating a safe and sustainable cannabis market, rather than promise increased tax revenue to be spread across various department budgets. As Colorado and Washington have shown, public safety, youth education, and funding progressive regulatory and research organizations is key to bringing responsible cannabis to our society.


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