A new fiscal estimate for Wisconsin Senate Bill 1045, a marijuana legalization bill filed last month by nearly 50 lawmakers, could generate substantial state and local revenue while requiring a moderate increase in administrative costs.

The estimate (PDF), released by the Department of Revenue, outlines projected tax revenues that would grow rapidly in the first several years following legalization. According to the analysis, total state sales and excise tax revenue is expected to reach $23.72 million in fiscal year 2026-27, increasing to $118.38 million in 2027-28, $192.41 million in 2028-29, and $258.15 million by 2029-30 .

The bill would legalize marijuana possession for those 21 and older, establish a regulated commercial market, create a medical marijuana program, and allow for expungement or adjustment of certain past marijuana convictions. Adults would be allowed to possess up to 2.5 ounces in public and up to five pounds at home, along with specified limits for concentrates and infused products.

The proposal includes a layered tax structure, with a 10% excise tax at both the producer and processor levels, a 5% retail excise tax, and an additional 3% tax on marijuana flower dedicated to a Cannabis Research Fund. Local governments would have the option to impose an additional tax of up to 5% on retail sales.

The Department of Revenue estimates that excise taxes alone would generate $202.26 million annually by the fourth year, while state sales tax collections would add another $55.89 million. Local governments could see additional revenue through both sales taxes and optional excise taxes, potentially exceeding $50 million annually depending on adoption rates.

Administrative costs are expected to total about $2.66 million annually, requiring 19 new full-time positions. One-time implementation costs are estimated at $4.28 million, largely tied to system upgrades and regulatory setup.

The estimate also projects licensing revenue, assuming 300 initial licenses, would bring in nearly $1 million in the first year, with growth in subsequent years depending on market participation.

State officials note that projections are based on data from Michigan and Illinois, adjusted for population, due to Wisconsin’s lack of an existing legal market.