The cannabis industry has gone from budding to booming in the past few years. Recreational cannabis sales are legal in 18 states to date (and Washington, D.C.) and in 2020, Americans spent over $18 billion on legal weed – a 71% increase from the year prior.

But if you’re considering jumping on the green bandwagon, keep in mind that cannabis isn’t like other industries (at least, not yet.) Because cannabis is not legal at the federal level, regulations on selling it vary wildly from state to state. So, if you’re a canna-entrepreneur wondering where to put down roots, it’s important to consider the regulations in each state where weed is legal.

One thing you’ll want to consider is taxes. Sales taxes on marijuana have been a huge motivator for states to legalize it (particularly as the economy recovers from COVID-19) and every state taxes the product differently depending on their goals.

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According to a report released this year by Chamber of Commerce, a digital resource for small businesses, the two states with the lightest taxes levied on cannabis dispensaries are Michigan, with a sales tax of 10% and no additional taxes, and Massachusetts, with a sales tax of 10.75% and no additional taxes.

Olivia Thomson, a spokesperson for Chamber of Commerce, told GreenState the simple structure of cannabis taxation in these states can also make it easier for cannabis businesses to thrive.

“Due to their easy-to-follow tax structure and, in some cases, the higher cost to the consumer in these states, you can ultimately net more profit per sale in Massachusetts and Michigan. Other factors come into play when owning a business of course, like market saturation and local demand, but these states are the easiest according to tax cost and structure.”

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Chamber of Commerce reports the states with the highest taxes on cannabis are Washington, with a 35% sales tax, California, with a 15% sales tax and additional weight-based taxes on cannabis products ($9.65/oz. for flower, $2.87/oz. for leaves cultivation tax, and $1.35/oz for cannabis plant,) Colorado, with a 15% sales tax and a 15% excise tax (i.e. an additional tax specific to cannabis products,) and Nevada, with a 10% sales tax and a 15% excise tax.

Clearly, there’s a wide range of opinions on how states should tax cannabis. But here’s where it gets even more complicated: Thomson said that, in some states, high taxes on cannabis don’t necessarily mean the state isn’t good for dispensaries and other cannabis businesses. On the contrary, some states, like Colorado, are using tax dollars to help the government better support the industry.

“While states like California have extensive and increasingly difficult bureaucratic barriers to entry, Colorado, despite its relatively higher taxes, has been actively accepting and expanding its cannabis market,” Thomson said. “Given Colorado’s long history with cannabis businesses, they seem to be one of the most supportive states in the U.S. for starting a cannabis business, despite their relatively higher taxes.”

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As an example, Thomson pointed out that Colorado launched a government office just weeks ago called the Cannabis Business Office, or “CBO,” which aims to “create new economic development opportunities, local job creation, and community growth for the diverse population across Colorado.” The higher taxes on cannabis in Colorado go toward a Marijuana Tax Cash Fund, which is meant to support initiatives like this one.

“Dispensary taxes are important, but they should not be the main deciding factor if you are choosing where to launch your business,” Thomson said. “As mentioned earlier, it is because of the slightly higher taxes in Colorado that industry-expanding initiatives like the CBO are possible. Nevertheless, certain states are charging too high of a price with no justification.”

Elissa Esher is Assistant Editor at GreenState. Her work has also appeared in The Boston Guardian, Brooklyn Paper, Religion Unplugged, and Iridescent Women. Send inquiries and tips to elli.esher@hearst.com.