States face millions in lost tax revenue due to outdated policy
These days, new states enacting cannabis reform are par for the course. More places have some form of legal cannabis in the U.S. than don’t, with Ohio being the most recent to join the club. New York is having a banger 2024 after three years of balancing against unlicensed operators. As new states turn over, the few remaining prohibition states are missing out on upwards of billions of dollars in legal cannabis earnings.
Ohio clocked $11M in regulated cannabis sales already, with New York on par to reach at least $500B In 2024. Meanwhile, Texans are flocking to one New Mexico town for legal weed.
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Ohio reports first week cannabis numbers
People in Ohio bought their first legal cannabis this month as dispensaries opened up to adult-use sales. Numbers are in, and the state brought in $11M in the first week. Ohio Cannabis Control released the sales data, also sharing that licensed shops sold 1,285 pounds of cannabis flower and 173,000 other products like edibles, capsules, extracts, and more.
The state collects a 10 percent cannabis tax on top of a 5.75 percent sales tax. Counties also have the option of adding their own. This equates to around $1.8M in potential taxes from the first week alone.
This earnings potential may balance out following a surge of excitement during the first week of legalization. Over time, these numbers will hit a plateau. Still, until then, regulators surely gawk at the influx of tax revenue.
New York finally catches the green rush
Things were not so quick to move in New York, where the state is only starting to gain the upper hand on unlicensed shops. The state earned almost $16.3M from its cannabis program in 2022-2023. This year, the state is on par to hit over $500M. This may be due to a concerted effort from state officials and law enforcement to close unlicensed operations.
The data comes courtesy of the New York Office of Cannabis Management, as reported by Cannabis Business Times.
“We’ve been seeing a lot of velocity in this market from the beginning of the year,” said OCM policy director John Kagia during the July meeting. “Essentially, in Q2, we made the same amount of money we made in all of 2023. And if that’s not an indication of momentum, I don’t know what is.”
As things turn around in New York and Ohio rakes in a new kind of tax revenue, those in states without legal weed are flocking to the border towns.
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Texans flock to New Mexico
Two years into the legal weed scene, New Mexico officially passed the $1B earnings mark. The top-earning weed cities are Albuquerque, which has brought in about $414M, and then Las Cruces and Santa Fe at around $90M in cannabis sales. The fourth-place earner paints a more interesting picture.
The small town of Sunland Park, New Mex. has around 17,000 residents, positioned where the state meets Chihuahua, Mex., and El Paso, Texas. Despite having a smaller population, compared to the top three earning towns, Sunland Park boasts $85M in sales since 2022.
This has only grown during the summer months. The state earned about $4.5M monthly from May to July. It was the second-highest-grossing cannabis city in the state since May. Many are attributing the glut to Texans who do not have legal access within their own state lines.
Other New Mex. border cities like Alamogordo, Chaparral, Ruidoso, and Portales are bringing in cannabis earnings. Sunland Park is tripling their numbers–at least. As the number of states with legal weed continues to far outpace those without, states may see big tax dollars from their constituents going to neighboring governments.
So far, this potential has not impacted Texas cannabis policy, as state officials continue their lawsuit against cities that voted to decriminalize minor possession. The money signs are not enticing the state away from cannabis prohibition yet.
Legalizing cannabis a boon for many state governments
While many operators worry about high taxation, regulatory costs, and keeping up with new rules–the states seem to be the real winners when it comes to legal weed. But still, as earnings numbers top out in the billions, strongholds like Texas continue turning the other cheek. As more cross the border to spend their cash in New Mexico, the tides may turn.
