Cannabis Tax Revenues Overtake Wine

As US states legalise cannabis, tax revenues from the drug now already exceed the money they get from alcohol.

Reading time: 1m

Medical cannabis revenues (Photo: Jose/Adobe Stock)
Medical cannabis revenues (Photo: Jose/Adobe Stock)

When US states began to legalise cannabis, the wine industry reacted in two ways. Some, like the giant brand owner Constellation and the distributor Southern Wines & Spirits, embraced the move and included the newly-legal substance in their business model. Others closed their eyes and hoped it would go away.

Figures revealed by Shanken suggest that one of these reactions was cleverer than the other. In Colorado, where the state has been moderate in its drinks taxation, cannabis brought in $396 million compared to just $53 million from all forms of alcohol. California raked in less than seven times as much from cannabis. The $832m it collected, however, was still just over twice the $415m it got from alcohol.

On average, according to the Institute on Taxation and Economic Policy (ITEP), across all the states where cannabis is legal, taxes last year - including Maine, Michigan, and Oregon where drink still brought in more cash – the drug yielded 20% more revenues than alcohol.

What goes up, however, tends to come down, and ITEP expects federal legalisation and the possibility for residents of one state to buy from another, will lead to lower prices and possibly reduced revenues.

Even so, all of those tax dollars suggest that some businesses are making quite a lot of money out of cannabis – including enterprises that previously relied on drink.

 

Tags

Latest Articles