A budtender (right) shows cannabis buds to a customer at the Green Pearl Organics dispensary on the first day of legal recreational marijuana sales in California, January 1, 2018 at the Green Pearl Organics marijuana dispensary in Desert Hot Springs, …
While cannabis remains illegal under federal law, 30 states and the District of Columbia collect excise taxes on cannabis sales.
By the numbers:
Those jurisdictions brought in an estimated $3.55 billion in combined cannabis tax revenue between July 2025 and June 2026, according to an analysis by the U.S. Census Bureau.
The total represents a 15.7% increase from fiscal year 2022, when states collected about $3.06 billion. The Census Bureau began tracking cannabis excise tax revenue in 2021, when 19 states and Washington, D.C., imposed the tax.
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The number of states collecting cannabis taxes has since grown to 31 jurisdictions, including Alabama, where medical cannabis sales began in May.
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California’s tax shift
Dig deeper:
California contributed significantly to a nationwide decline in cannabis tax revenue during fiscal year 2023.
The state previously imposed a 15% retail excise tax and a cultivation tax. California eliminated the cultivation tax on July 1, 2022, in an effort to reduce the tax burden, lower prices and discourage consumers from buying cannabis on the illegal market.
California’s cannabis tax revenue fell from $878.56 million in fiscal year 2022 to $528.23 million in fiscal year 2023. Nationwide collections increased again in later years as additional states began taxing cannabis sales.
The change highlights the challenge states face when designing cannabis tax systems. Higher taxes can generate more money for state governments, but they can also increase prices and push consumers toward unlicensed sellers.
States use different approaches, including taxes on cultivation, wholesale transactions and retail sales. Retail taxes may also vary based on a product’s weight, THC content or form, such as cannabis flower or vapor products.
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Where cannabis taxes are highest
Dig deeper:
Washington and Montana collect more than $50 per resident in cannabis excise taxes each year, the highest per-capita totals in the country, according to the Census Bureau. Washington applies a 37% retail excise tax, while Montana’s retail rate is 20%.
Alaska collects more than $30 per resident despite having no retail excise tax. Instead, the state imposes a $50-per-ounce cultivation tax when cannabis is transferred to licensed businesses.
States with recreational cannabis markets generally collect more revenue per resident than states with medical-only programs, which are more common in the South.
New markets add revenue
Dig deeper:
Delaware and Minnesota are among the states with rapidly expanding recreational cannabis markets.
Minnesota issued 324 new cannabis business licenses in 2025 and raised its cannabis excise tax rate from 10% to 15%. The state collected $34.44 million in fiscal year 2026, up from $16.57 million the previous year.
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Delaware began collecting a 15% cannabis excise tax on Aug. 1, 2025. Revenue has continued to increase as more licensed businesses open and enter the market.
The Source: The information in this story came from an analysis by the U.S. Census Bureau, which tracks state and local government tax revenue through its Quarterly Summary of State and Local Government Tax Revenue survey. This story was reported from Los Angeles.