State-by-State Breakdown of How Marijuana Tax Revenue Is Spent in Legal Cannabis States

As of April 2025, 21 U.S. states have operational adult-use cannabis markets, with Delaware and Minnesota having markets that are launching later this year or early 2026. Each state has a unique framework for taxing and allocating marijuana revenue.

Below is a comprehensive overview detailing how each state utilizes recreational marijuana tax revenue, based on state law.

Alaska

• Tax Structure: Weight-based excise tax: $50/oz (flowers), $25/oz (immature buds), $15/oz (trim), $1/clone.

• Revenue Allocation:

  • 25% to the general fund.

  • 50% to the Departments of Public Safety, Health and Social Services, and Corrections.

  • 25% to the Marijuana Education Fund.

Arizona

• Tax Structure: 16% excise tax plus 5.6% transaction privilege tax.

• Revenue Allocation:

  • 33% to community colleges.

  • 31.4% to police and fire departments.

  • 25.4% to the highway fund.

  • 10% to the justice fund.

  • 0.2% to the state attorney general for enforcement.

California

• Tax Structure: 15% excise tax on retail gross receipts.

• Revenue Allocation:

  • Youth Programs: 60% of the cannabis tax revenue is allocated to youth education, prevention, and early intervention programs.​

  • Environmental Restoration: 20% is directed towards environmental cleanup and restoration efforts, particularly addressing damage from illegal cannabis cultivation.​

  • Public Safety: 20% supports public safety initiatives, including funding for law enforcement and fire protection services.

Colorado

• Tax Structure: 15% excise tax on wholesale sales and 15% sales tax on retail sales.

• Revenue Allocation:

  • Excise tax revenue supports public school construction.

  • Sales tax revenue funds the Marijuana Tax Cash Fund, which supports health care, education, and substance abuse prevention.

Connecticut

• Tax Structure: Excise tax based on THC content: $0.00625/mg for flower, $0.0275/mg for edibles, $0.009/mg for other products; plus 6.35% sales tax.

• Revenue Allocation:

  • 15% to the general fund.

  • 60% of the remaining revenue to social equity programs.

  • 5% of the remaining revenue to substance misuse treatment programs.

Delaware

• Tax Structure: 15% excise tax.

• Revenue Allocation:

  • 7% to the Justice Reinvestment Fund for community improvement projects.

  • Remaining funds are allocated by the legislature after covering administrative costs.

Illinois

• Tax Structure: Excise tax varies: 10% for products with ≤35% THC, 25% for products with >35% THC, and 20% for infused products; plus 7% tax on wholesale sales.

• Revenue Allocation:

  • 35% to the general fund.

  • 25% to the Restore, Reinvest, and Renew (R3) Program.

  • 20% to mental health and substance abuse services.

  • 10% to pay state bills.

  • 8% to local governments.

  • 2% to public education.

Maine

• Tax Structure: 10% excise tax; additional excise tax based on product weight.

• Revenue Allocation:

  • 12% to the Adult Use Marijuana Public Health and Safety Fund.

  • 88% to the general fund.

Maryland

• Tax Structure: 9% sales tax.

• Revenue Allocation:

  • 35% to the Community Reinvestment and Repair Fund.

  • 5% to counties where cannabis sales are allowed.

  • 5% to the Cannabis Public Health Fund.

  • 5% to the Cannabis Business Assistance Fund.

  • Remaining funds to the state general fund.

Massachusetts

• Tax Structure: 10.75% excise tax; 6.25% sales tax; up to 3% local option tax.

• Revenue Allocation:

  • Sales tax revenue supports the general fund, the Massachusetts Bay Transportation Authority, and the School Building Authority.

  • Excise tax revenue funds the Cannabis Control Commission and public health programs.

Michigan

• Tax Structure: 10% excise tax; 6% sales tax.

• Revenue Allocation:

  • 15% to municipalities with retail stores.

  • 15% to counties with retail stores.

  • 35% to the School Aid Fund.

  • 35% to the Michigan Transportation Fund.

Minnesota

• Tax Structure: 10% excise tax; 6.875% sales tax.

• Revenue Allocation:

  • 80% to the state government.

  • 20% to local governments.

  • Funds are directed towards education, prevention, outreach, and research.

Missouri

• Tax Structure: 6% excise tax; 4.225% state sales tax; local taxes up to 3%.

• Revenue Allocation:

  • After covering operational costs and expungement expenses, remaining revenues are split equally among:

    • Veterans services.

    • Drug addiction treatment and overdose prevention.

    • Public defender system.

Montana

• Tax Structure: 20% excise tax.

• Revenue Allocation:

  • $6 million annually to the HEART program for substance abuse recovery.

  • 20% of remaining revenue to Fish, Wildlife, and Parks.

  • 3% or $200,000 (whichever is less) to veterans and surviving spouses.

New Jersey

• Tax Structure: $2.50 per ounce excise tax on cultivators; 6.625% sales tax; local taxes up to 2%.

• Revenue Allocation:

  • 70% to communities disproportionately affected by prior cannabis enforcement.

  • Funds support economic development, education, and public health initiatives.

Nevada

• Tax Structure: 15% wholesale tax; 10% retail excise tax.

• Revenue Allocation:

  • Funds are directed to the state’s general fund, supporting education and public health programs.

New Mexico

• Tax Structure: 12% retail excise tax, increasing by 1% annually until reaching 18% by July 1, 2030; 5.125%–8.6875% gross receipts tax, varying by location.​

• Revenue Allocation:

  • Two-thirds of the cannabis excise tax revenue is deposited into the state’s general fund.

  • One-third is distributed to local governments (municipalities and counties) where the sales occur, based on the location of the retail activity.​

New York

• Tax Structure: 9% state sales tax; 4% local sales tax; THC-based potency tax: $0.005/mg (flower), $0.008/mg (concentrates), $0.03/mg (edibles).

• Revenue Allocation:

  • 40% to community reinvestment grants.

  • 20% to public schools.

  • 40% to drug treatment and public health programs.

Ohio

• Tax Structure: 10% excise tax; 5.75% state sales tax; local taxes up to 2.25%.​

• Revenue Allocation:

  • 36% to the Cannabis Social Equity and Jobs Fund, supporting social equity programs and job initiatives.

  • 36% to the Host Community Cannabis Fund, benefiting municipalities and townships that host adult-use dispensaries.

  • 25% to the Substance Abuse and Addiction Fund, funding education and treatment services.

  • 3% to the Division of Cannabis Control and Tax Commissioner Fund, covering regulatory and administrative costs.

Oregon

• Tax Structure: 17% excise tax; local taxes up to 3%.

• Revenue Allocation:

  • 40% to the State School Fund.

  • 20% to mental health, alcoholism, and drug services.

  • 15% to state police.

  • 10% to cities.

  • 10% to counties.

  • 5% to the Oregon Health Authority for drug abuse prevention.

Rhode Island

• Tax Structure: 10% excise tax; 7% sales tax; 3% local tax.

• Revenue Allocation:

  • Funds support program administration, substance use disorder prevention, public education campaigns, treatment services, public health monitoring, and law enforcement training.

Vermont

• Tax Structure: 14% excise tax; 6% sales tax.​

• Revenue Allocation:

  • The 6% sales tax revenue is dedicated to a grant program aimed at starting or expanding afterschool and summer learning programs, emphasizing underserved communities.​

  • Additionally, up to 30% of the cannabis excise tax revenue (capped at $10 million annually) is allocated to substance misuse prevention programming.​

Washington

• Tax Structure: 37% excise tax; 6.5% state sales tax.​

• Revenue Allocation:

  • Health Care: Around 54% to 61% of cannabis tax revenue is allocated to health care programs, primarily funding the state’s Basic Health Plan Trust Account, which provides health care for low-income individuals and those without insurance coverage.

  • General Fund: Around 30% of the revenue goes into the state’s general fund, supporting various state programs, including K-12 education. ​

  • Prevention, Education, and Treatment: Approximately 9% is directed toward substance abuse prevention, public health programs, and education initiatives.

  • Local Governments: About 3% is distributed to local governments that permit cannabis businesses, helping to offset enforcement and administrative costs. ​

  • Administration and Enforcement: Roughly 3% funds the administration and enforcement of cannabis regulations.

  • Research and Social Equity

Marijuana Tax Revenue Chart