As more states continue to adopt legislation that legalizes the use of marijuana for medicinal and recreational purposes, the financial impact is having significant positive effects on state budgets across the country. The economic benefits in states with legalized recreational, adult-use marijuana include large tax revenues, job growth, saving money on enforcement, investment opportunities, and more.
States with Legalized Recreational Cannabis Use 
As of May 25, 2022, Rhode Island became the 19th state to legalize recreational adult-use marijuana, with another two territories and the District of Columbia also regulating the use of cannabis for adults for non-medical use. As of May 25, 2022, 37 states allow cannabis use for medical purposes. The Marijuana Policy Project (MPP) was instrumental in providing successful legislative efforts for 11 out of the 19 states with legalized recreational cannabis use. The MPP is dedicated to changing cannabis laws and ending prohibition in the United States to boost local economies, reduce crime, and fight for fairness and social justice.
Of the 19 states currently with legalized adult use marijuana, seven states have yet to begin sales. With only 12 states currently reporting tax revenue for adult use marijuana, there was a total of $3.7 billion collected in tax revenue during the calendar year of 2021. This is more than double the tax revenue generated just two years prior in 2019. Other states have legislation in the works that will be voted on this coming November 2022.
The Economic Impact of Tax Revenue for Adult Use Only
The economic impact of tax revenue alone in states with legal adult use cannabis is providing key financial benefits and that is not even considering fees paid for applications, licensing, income taxes generated by job growth, corporate taxes, or tax revenue from medical cannabis use. The number of incentives for states to push for legal marijuana are quickly becoming apparent with millions of dollars being pumped into public school systems, medical and child care programs, and various public health initiatives.
The MPP provides a list of Cannabis Tax Revenue in each state, showing the state’s tax structure, tax rates, and corresponding tax revenue since legalization in chronological order since passing legislation. California’s tax revenue on recreational cannabis topped $1 billion in 2020, with Washington showing the second-largest tax revenue just under 500 million, followed by Illinois, Colorado, and Michigan, as reported by Statista.
Economic Benefits of Adult-Use Cannabis Tax Revenue 
Some examples of what these states have done with adult-use cannabis tax revenue include:
- California has distributed more than $100 million to community groups and invested large chunks of money into childcare and environmental programs.
- Washington state is funneling 600 million for every $1 billion in revenue collected to public health initiatives including health insurance for low-income families.
- Colorado has already dedicated over $538 million of adult-use cannabis tax revenue to improving Colorado’s public school system.
- Michigan has set aside over $11 million for the K-12 public education system, more than $11 million for transportation, and more than 10 million for municipalities and counties just from taxes collected during 2020.
These are just some examples of what states are doing with increased tax revenue from legalized adult use marijuana.
Other benefits to states’ economies include an increase in payroll withholding and income taxes for jobs created to support the industry, additional retail sales and excise tax in some states, as well as money saved on enforcement. According to a report published by the ACLU, there were more than 8 million arrests for pot from 2001 to 2010, which meant one arrest every 37 seconds.
This costs a lot of money with an estimated $3.6 billion each year spent on the war on marijuana which has completely failed to reduce the availability or use of cannabis. Additionally, reports reveal staggering racial injustice with Blacks being 3.73 times more likely to be arrested for possession of marijuana than whites.
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