The legalization of cannabis has transformed the economic landscape of many states across the United States. New federal data reveals that since 2021, states have collectively collected over $8.7 billion in marijuana taxes. This figure not only highlights the financial potential of legalized cannabis but also reflects changing public attitudes toward marijuana use and its regulation. As more states embrace legalization, understanding the implications of this revenue generation becomes crucial for policymakers, businesses, and communities alike.

The Landscape of Cannabis Legalization in the U.S.

The journey toward cannabis legalization in the United States has been long and complex. Cannabis was criminalized in the early 20th century, with the Marihuana Tax Act of 1937 effectively prohibiting its use and distribution. However, attitudes began to shift in the late 20th century, with California becoming the first state to legalize medical marijuana in 1996.

The momentum continued to build, culminating in Colorado and Washington becoming the first states to legalize recreational marijuana in 2012. Since then, a wave of legalization has swept across the nation, with 21 states and the District of Columbia now allowing recreational use.

Current Legal Status of cannabis legalization in the  U.S

As of September 2024, a total of 21 states have legalized recreational marijuana, while a dozen more permit medical use. The regulatory frameworks vary significantly from state to state, influencing tax structures, sales practices, and usage regulations. Some states have opted for high taxes on cannabis sales as a means to generate revenue, while others have focused on creating a more accessible market for consumers.

Tax Revenue Breakdown

 Overview of Revenue Generation

According to recent federal data, states have amassed over $8.7 billion in marijuana tax revenue since 2021. This revenue comes from various sources, including excise taxes, sales taxes, and licensing fees imposed on cannabis businesses. The breakdown of this revenue is essential for understanding how different states are capitalizing on legalization.

• Excise Taxes: These are taxes imposed directly on the sale of cannabis products. States like California and Colorado have implemented excise taxes that can range from 15% to 30%, depending on local regulations.

• Licensing Fees: States also collect significant revenue through licensing fees charged to cannabis growers, manufacturers, and retailers. These fees can be substantial and contribute to the overall financial picture.

State Contributions

California: The Leader

California remains at the forefront of marijuana tax revenue generation. Since legalizing recreational cannabis in January 2018, the state has collected over $3 billion in taxes alone. The state’s complex tax structure includes a 15% excise tax on retail sales and additional local taxes that can vary widely by municipality.

The revenue generated has been earmarked for various public services:

Colorado: A Model for Success

Colorado was one of the first states to legalize recreational marijuana and has since become a model for other states looking to implement similar legislation. Since legalization, Colorado has generated over $2 billion in tax revenue from cannabis sales.

The state’s tax structure includes a 15% excise tax on wholesale transactions and a 2.9% state sales tax that applies to all retail sales. Local jurisdictions can impose additional taxes as well.

Colorado has utilized its cannabis tax revenue for various purposes:

Illinois: Rapid Growth

Illinois is another state that has seen rapid growth in marijuana tax revenue since legalizing recreational use in January 2020. In just over three years, Illinois has collected more than $1 billion in cannabis taxes.

The state imposes a tiered excise tax based on THC content:

Illinois has directed its cannabis revenue toward social equity programs aimed at addressing historical injustices related to drug enforcement policies.

Economic Impact Beyond Tax Revenue

Legalizing marijuana has led to substantial job growth across various sectors. As of early 2024, nearly 15,000 cannabis dispensaries operate in the U.S., employing an estimated 93,000 workers. This includes roles in cultivation, processing, distribution, and retail. Additionally, the industry stimulates job creation in ancillary sectors like software development, accounting, and construction. The cannabis sector is projected to grow further, potentially increasing legal cannabis jobs by 250% over the next decade.

The burgeoning cannabis industry presents numerous business opportunities for entrepreneurs. The market has attracted significant investment, leading to the establishment of various businesses ranging from cultivation facilities to dispensaries and ancillary services. In 2022, consumers spent approximately $30 billion on legal marijuana products, surpassing expenditures on chocolate and craft beer. This consumer spending not only benefits cannabis businesses but also generates substantial tax revenue for states.

Cannabis tax revenue often supports local communities by funding essential services. For instance, Colorado has allocated millions from cannabis taxes toward education and homelessness services. This redistribution of wealth enhances community welfare and infrastructure.

Legalization also reduces the costs associated with enforcing drug laws. States can reallocate funds previously used for law enforcement to other community programs, further amplifying the positive economic impacts.

 Long-term Economic Growth

As the cannabis industry matures, it is expected to contribute significantly to overall economic growth. Projections indicate that the total economic impact of the cannabis industry could reach nearly $150 billion by 2026, underscoring its potential as a major economic driver in the U.S.

Community Benefits

Beyond economic metrics, communities are experiencing benefits from legalized marijuana:

Challenges Ahead

Despite the positive economic impacts associated with marijuana legalization, several challenges remain:

1. Federal Regulations

One significant hurdle is the ongoing federal prohibition of marijuana. While many states have legalized its use, cannabis remains classified as a Schedule I substance under federal law. This creates complications for banking and taxation:

1. Social Equity Concerns

As states continue to generate substantial revenues from legalized marijuana, there is growing concern about social equity:

1. Market Saturation

As more states legalize marijuana and existing markets expand, there is potential for market saturation:

Prospective Developments

As more states legalize recreational marijuana, tax revenues are expected to continue rising. With 37 states and Washington, D.C., having legalized some form of cannabis by 2024, the potential for increased tax revenue is significant. Experts estimate that nationwide legalization could generate up to $8.5 billion annually for all states. This growth will likely be driven by expanding markets and consumer acceptance, as well as the introduction of new products and services within the cannabis industry.

States are experimenting with various tax structures to optimize revenue while ensuring competitiveness against the illicit market. The adoption of potency-based taxation—taxing products based on THC content—has emerged as a trend in states like New York, Illinois, and Connecticut. This approach aims to create a more equitable tax system that can adapt to market changes and consumer preferences. However, states must remain cautious about overtaxing, which can drive consumers back to illegal markets.

The allocation of marijuana tax revenue will continue to be a critical issue. Many states have earmarked funds for essential services such as education, public health initiatives, and infrastructure improvements. For instance, Colorado has directed substantial portions of its cannabis tax revenue toward school construction and behavioral health programs. As revenues grow, states may face pressure to diversify spending or address social equity issues related to past drug enforcement practices.

As the cannabis market matures, prices may stabilize or decline due to increased competition and efficiency in production. This maturation could result in fluctuating tax revenues as consumer behavior adjusts. States that have seen significant price drops—like Colorado, where prices fell by 60% from 2014 to 2023—may experience challenges in maintaining consistent revenue streams. Policymakers will need to adapt their strategies accordingly.

The ongoing conversation about federal legalization could dramatically impact state revenues. If cannabis were legalized at the federal level, it would open up interstate commerce opportunities and allow cannabis businesses access to traditional banking services. This change could lead to an influx of investment and further stimulate job creation within the industry.

As states continue to collect substantial tax revenues from marijuana sales, there is growing recognition of the need for social equity initiatives. Many advocates argue that a portion of tax revenue should be directed toward communities disproportionately affected by past drug policies. Future developments may include programs aimed at providing grants for minority-owned businesses within the cannabis sector or funding for substance abuse treatment programs.

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 Conclusion

The collection of over $8.7 billion in marijuana taxes since 2021 demonstrates not only the financial viability of legalized cannabis but also its potential impact on public services and community development. As more states navigate their paths toward legalization and regulation, it will be crucial for policymakers to address challenges related to equity, access, and federal regulations.

With continued advocacy for reform at both state and federal levels, along with innovative approaches to taxation and regulation, the future looks promising for both consumers and businesses within this burgeoning industry. As society continues adapting its views on cannabis use, understanding these dynamics will be essential for maximizing benefits while minimizing challenges associated with this rapidly evolving sector.

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Last week, I wrote a round-up post on Oregon cannabis. This week, I thought I’d drop a line on the federal happenings. Which are quite a few.

The Nixon tapes

This was a fun piece of news, unearthed by Minnesota cannabis lobbyist Kurtis Hanna. Ernesto Londoño then broke the story on September 14^th for the New York Times, which you can read here. In short, Nixon conceded that marijuana “is not particularly dangerous,” despite calling the plant “public enemy No. 1” only two years prior. And he opined that punishments ought not be so serious for possession of the plant.

I say this news is “fun” because it’s more interesting than surprising and I doubt it will have much impact. Nixon was a mean old liar, and one with an animus toward certain groups of people. I also don’t think this revelation will persuade the vocal, diminishing minority of prohibitionists to change their minds. I like it anyway, especially as cannabis history nerd. We were right!

DEA embraces two-step review for marijuana rescheduling

This one is important, in my opinion. It relates to the method of analysis DEA must undertake when determining whether a drug, including marijuana (and psilocybin, and any other verboten substance), has a “currently accepted medical use.” In April, the Department of Justice’s Office of Legal Counsel (OLC) put DEA in a box on this one, explaining that the old, five-part test was “impermissibly narrow.” OLC thus endorsed the two-part test. On September 17^th, DEA assented to the test for Schedule I review.

The two-part test bodes well for DEA’s rulemaking, now underway, to move marijuana from Schedule I to Schedule III of the federal Controlled Substances Act. How do we know? Well, the Schedule I stans don’t like it, for starters. This is because, under two-part review, a drug can have currently accepted medical use: a) even if that drug hasn’t been approved by FDA, and b) even if the drug wouldn’t pass DEA’s scrapped five-part test. So, more runway.

DOOBIE Act on the way?

I’m embarrassed even having to type that. But yes, some Congressperson named a federal cannabis bill the “DOOBIE Act,” unfortunately. With a press release and everything.

This proposal would prohibit federal agencies from denying security clearance and employment to people simply because they have used marijuana. In my reading of the actual bill, these agencies could still ding an applicant for past marijuana use, but they couldn’t “base a suitability determination . . . solely on the past use of marijuana by the individual.” The word “solely” needs to go.

Because this bill applies only to “Executive agencies” under 5 U.S. Code § 105, it also wouldn’t have prohibited, say, Joe Biden from doing his “doobie” staffers dirty, which he definitely did.

FDA gets the nod on tobacco-hemp

I like the Congressional Research Service (CRS) and often send people thataway. On September 16^th, CRS published a new report titled “Legal Effect of Marijuana Rescheduling on FDA’s Regulation of Cannabis.” Here are my extremely condensed takeaways:

1. FDA can authorize tobacco products containing hemp-derived cannabinoids (although it hasn’t yet). This is because hemp is not a controlled substance.
2. Marijuana, even at Schedule III, would still be banned as a tobacco additive (and probably always will be). This is because FDA would need to approve specific cannabis medicines first, and it never does that for botanical drugs.

Here we have one of those cognitively dissonant outcomes often seen with the cannabis plant. As a reading of law it makes sense, but as to policy it’s nonsense. You can thank Richard Nixon and other cannabis heels for that.

Does Hemp Have Cancer-Fighting Properties?

Hemp, Weed’s Cousin, May Have More Therapeutic Value Than We Thought

 

While both hemp and cannabis come from the same plant, they possess significant differences.

Hemp, in particular, has become the less popular cousin of weed because more people were interested in the psychoactive properties of tetrahydrocannabinol (THC). And since hemp only contains less 0.3% or less of THC, recreational consumers weren’t keen on it.

Historically speaking, hemp has been famous for thousands of years across ancient civilizations around the world. It was cultivated for its reliable fibers, used in textiles, rope, clothing, and paper. Even back then, hemp’s nutritious properties were known. People ate its seeds and extracted oil, while it was used for treating many conditions in ancient China and ancient India.

However, hemp plants do contain a much higher amount of cannabidiol (CBD), and due to the sheer demand for CBD products lately for their medicinal benefits, hemp became better-known. Now, the global CBD market is estimated to be worth a cool US $7.71 billion, and it’s only expected to grow more. After all, the CBD in hemp has been found to be tremendously powerful especially for treating a wide range of diseases and afflictions, from anxiety to insomnia, and much more.

However, CBD isn’t the only therapeutic value found in hemp.

Can Hemp Help Fight Cancer?

A recent study by the Rowett Institute took a look into the potential value of specific fibers added to the diet of patients with prostate cancer, and its effect, if any, on tumors. The NHS Grampian Charity has invested £90,000 into this research, which has been led by Professor Anne Kiltie, who is a member of Friends of ANCHOR Clinical Chair in Oncology, at the University of Aberdeen.

The new study, which was conducted by Dr. Aliu Moomin, Dr. Sylvia Duncan, and Dr. Madi Neascu, focused on hemp fibers such as hemp hull, inulin, and pectin. They analyzed how these fibers affect gut bacteria in animal models, and its overall impact on tumor cells.

According to Professor Kiltie: “This funding will allow us to build on our previous work demonstrating a benefit to dietary fibre supplementation in terms of improved tumor control and protection of the bowel from radiotherapy damage, by looking at other types of fiber and how these interact with the gut microbiota,” she said. The idea is that if they notice improvements when cancer patients supplement with fiber, and it actually helps delay the progression of cancer, this would be instrumental improving patient outcomes.

We have long known that diet plays a critical role in cancer development and prevention, so it only makes sense to take advantage of the healing power of gut microbiome for cancer patients. There are several studies that show a strong link between gut microbiome and one’s cancer risk. One study in particular found that patients with melanoma, who possessed healthy gut bacteria, had much better responses to immunotherapy treatments compared to patients who had poorer gut bacteria.

“We hope that this work would lead to a large randomized clinical trial in the UK in men on active surveillance for prostate cancer. If the fiber supplementation is found to delay progression of the disease and prevent the need for active treatments, this would significantly improve outcomes for these patients and their quality of life,” she added, shared by a release published by the University of Aberdeen.

According to Dr. Simon Dunmore, the NHS Grampian Charity research officer: “The importance of intestinal microbiome in a wide range of health areas, including the development of cancer, is becoming increasingly highlighted by numerous scientific studies,” he said. “This study will provide important evidence of the role of a beneficial gut microbiome composition in reducing the aggressiveness and development of prostate cancer and the positive effect of dietary fibre on the microbiome,” he added.

Studies On Hemp Oil For Cancer

There are other studies supporting the viability and potential of hemp compounds for treating cancer. In another recent study out of Shanghai in China, researchers found that hemp oil extracts which contain the terpenes humulene and caryophyllene were found to be effective in treating pain and fighting cancer.

For the study, Chinese researchers analyzed the tumor-fighting and painkilling properties of hemp oil on mice. They found that after administering the hemp oil extracts, it was found to significantly reduce tumor growth. “Thes results reveal that HEO [hemp essential oil] plays a role not only in tumor chemotherapy induced peripheral neuropathy treatment, but also in anti-tumor treatment which offers key information for new strategies in cancer treatment and provides reference for the medicinal development of hemp,” they said.

Additionally, since hemp contains abundant levels of cannabidiol (CBD), it can be used for alleviating the symptoms of cancer treatment. Studies have shown that CBD is effective for helping relieve pain, stimulate the appetite, and minimize nausea and vomiting – all of which are tremendously valuable for cancer patients undergoing chemotherapy. CBD can also be integrated into one’s lifestyle to reduce chronic inflammation and stress, which, when left untreated, can contribute to cancer progression.

Conclusion

These studies are promising: hemp is clearly not just important for its industrial benefits, but it can also help save lives. The compounds found in hemp plants may help fight and treat cancer, shrink tumors, and even enhance the effectiveness of traditional cancer therapies. If you or a loved one want to explore using hemp for wellness and cancer prevention, you may consult with healthcare professionals for tailored medical advice.

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