With nearly $3 billion in adult-use cannabis excise tax revenue accrued in 2021, business is certainly booming. To underscore the point, cannabis excise tax revenue eclipsed alcohol excise tax revenue last year, according to the Institute on Taxation and Economic Policy.  

Seven of the 11 states that oversaw legal adult-use sales in 2021 helped account for that measure with particular clarity. In California, Illinois, Massachusetts, Washington, Colorado, Arizona and Nevada, cannabis tax revenue outpaced alcohol tax revenue.

In California, for instance, cannabis excise tax revenue equaled $832 million, with alcohol coming in at $415 million. And in Colorado, cannabis sales brought in $396 million in excise taxes last year. Alcohol delivered just $53 million.

“While Colorado represents a relatively extreme case, low alcohol tax rates are the norm across much of the country as their real value has been eroded substantially by years of inflation and policy inaction,” according to institute authors Carl Davis and Mike Hegeman.

Cannabis is clearly showing its capacity for growth.

Pair the tax takeaways with this statistical projection from BDSA: “Global cannabis sales will surpass $61 billion in 2026.” 

And yet tobacco is still the leader of the pack, as far as U.S. sin tax goes. Cannabis excise tax revenue eclipsed tobacco excise tax revenue last year in only two states: Washington and Colorado.

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