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California Is Closing in on $2 Billion in Cannabis Tax Revenue

Cash-starved state governments might want to pay attention to what's happening in legal states.

Opinions expressed by Entrepreneur contributors are their own.

As 2020 rolls toward its merciful conclusion, one positive has emerged: Cannabis is one of the country's hottest industries and shows no sign of slowing anytime soon. States such as California, Colorado, and Illinois continue to set sales records.

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The turning point came for many states during the pandemic. After local governments declared cannabis an essential business, dispensaries across the country saw sales continue to climb. Even as they gave up other purchases, people still ordered both recreational and medical cannabis during the lockdowns.

As the year progressed, cannabis sales figures in states that just legalized marijuana, such as Michigan and Illinois, revealed that the demand for cannabis continued to accelerate even after the rush of pent-up demand in the first few months of legalization.

Here's where things stand in a few states where cannabis sales have set records in 2020.

RELATED: California's New Cannabis Terroir Laws Are A Major Win For Legacy Growers



In its most recent filing, the California Department of Tax and Fee Administration (CDTFA) reported that since legal recreational marijuana sales started in January 2018, the state has taken in more than $1.8 billion in revenue through the cannabis excise tax, cultivation tax, and sales tax. That number is sure to get cash-starved government officials' attention at both the state and federal level.

The CDTFA further reported cannabis industry sales of $306.7 million in the third quarter of 2020 that ended at the beginning of November. That's a new high for quarterly sales figures.


The Rocky Mountain State is where legal recreational cannabis sales started in 2014, and the state continues to reap the benefits of being ahead of the curve. Sales in Colorado reached $206.4 million in September alone. Through the first nine months of the year, total sales for the state's cannabis industry hit $1.6 billion, a pace that looks to shatter the record $1.7 billion in sales from 2019. Since sales began in January 2014, customers have purchased $9.4 billion in weed products.


Sales figures in October topped $100 million. That's the first month Illinois' sales have surpassed that figure since the recreational marijuana market started in January 2020. For the first 10 months of sales, the state has sold $500 million in cannabis, with about $300 million in medical marijuana sales, according to Agrinews. 

Ben Kovler, founder and CEO of Chicago-based Green Thumb, a cannabis manufacturer, and retailer, seemed to sum up the current state of the industry when speaking to Agrinews: “There is mass acceptance of the U.S. cannabis industry by the consumer and the voter. In this divided country, there are very few issues that have that kind of universal acceptance.”

Related: Future Legal Cannabis States Can Learn from California's Mistakes


Other states may soon join the party.

Thanks to the November election, recreational cannabis is legal in 15 states. More states may try to join their number soon. Certainly, they cannot help but see the numbers above and consider both state residents and government coffers' benefits.

It also means more potential hotspots for cannabis entrepreneurs. Marijuana advocates NORML report that the following states seem most likely to debate adult-use legalization in 2021.

  • Connecticut
  • New Mexico
  • New York
  • Rhode Island
  • Virginia

According to NORML, these states do not allow citizens to directly put the issue on the ballot, which is what happened in 13 of the 15 current legal states (Vermont and Illinois are the exceptions). Legalization will have to occur through the states' legislatures.

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