(The special retail tax rate was 10% until the legislature and governor increased it in July 2017. Colorado’s 15% wholesale excise tax and its 15% special retail tax do not apply to those sales. Colorado has a significant medical program, with about 1.2% of the population enrolled. Colorado already had a developed medical cannabis regulatory system, and many businesses were able to transition to having both a medical and an adult-use counter. 5.8 million) | Tax rate: 15% wholesale, 15% special retailĬolorado voters approved an initiative to regulate cannabis for adults in November 2012, and on January 1, 2014, the state became the first with legal adult-use sales. They do not include medical cannabis tax revenue, application and licensing fees paid by cannabis businesses, additional income taxes generated by workers in the cannabis industry, or taxes paid to the federal government.Ĭolorado (pop. These figures include cannabis excise taxes and states’ standard sales taxes that applied to cannabis. States are listed in chronological order, based on when state-legal cannabis sales began, with the most mature markets first. This document reviews each legalization state’s adult-use cannabis tax structure, population, and year-by-year adult-use cannabis tax revenue. In every state where cannabis tax revenue decreased in 2022, tax proceeds still outperformed every year prior to the COVID-19 pandemic and related shutdowns. Cannabis was a product that could still be purchased and made the difficulty of staying at home for months on end watching TV shows and movies a bit more enjoyable.” So many people increased their consumption of consumer packaged goods. People could not spend their money going to concerts, going out to dinner, or vacation travel. “While 2022 cannabis taxes are lower in some established markets than they were in 2021, it's important to know how COVID-19 and pandemic initiated lockdown orders increased cannabis demand. Those burdens do not apply to intoxicating cannabinoids derived from hemp.Īs Vicente LLP Director of Economics and Research Andrew Livingston explained, 2022’s revenue decreases were “due to a multitude of factors,” and that one of them is likely COVID-related. Cannabis businesses also face significant challenges due to ongoing federal prohibition, which drives up costs of rent, banking, and almost everything else, and results in an enormous federal tax burden. Reasons for declining tax revenue include the widespread availability of intoxicating synthetic cannabinoids made from hemp, which are largely unregulated and not subjected to cannabis excise taxes lower prices in several states due to oversupply sales beginning in additional states - reducing demand from visitors in more mature states consumers having less disposable income due to inflation and - in California - the state reducing the tax rate to make legal cannabis more competitive. In 2022, however, six states with the most mature legalization laws experienced decreases in cannabis tax revenue, while newer legalization states generated more cannabis tax revenue in 2022 than in 2021. Prior to 2022, every legalization state had seen annual increases in cannabis tax revenue. Even as new states came online, we saw a slight decrease in total state cannabis tax revenue - from over $3.86 billion in 2021 compared to $3.77 billion in 2022. All but two of them - Maryland and Virginia - have also legalized, regulated, and taxed cannabis sales, and Maryland’s governor plans to sign twin bills that are on his desk to do so.Īlthough cannabis sales have continued to generate billions in annual tax revenue, 2022 marked the first year with a decrease in tax revenues compared to the prior year. Twenty-two states have legalized cannabis possession for adults 21 and older. In addition to revenue generated for statewide budgets, cities and towns have also generated hundreds of thousands of dollars in new revenue from local adult-use cannabis taxes. In 2022, legalization states generated more than $3.77 billion in cannabis tax revenue from adult-use sales. Through the end of 2022, states have reported a combined total of more than $15 billion in tax revenue from legal, adult-use cannabis sales. Since 2014 when sales began in Colorado and Washington, legalization policies have provided states a new revenue stream to bolster budgets and fund important services and programs. Legalizing cannabis for adults has been a wise investment.
0 Comments
Leave a Reply. |