Since the bureau began tracking the data, total cannabis tax revenue increased 15.7%, rising from $3.06 billion in fiscal year (FY) 2022 to $3.55 billion in FY 2026 (Table 2).

The sizable drop in FY 2023 total revenue can be largely attributed to California.

Prior to FY 2023, California levied both a 15% retail excise tax and a cultivation tax. On July 1, 2022, the state eliminated the cultivation tax to ease the tax burden, lower market prices and curb the black market.

As a result, California’s cannabis tax revenues fell from $878.56 million in FY 2022 to $528.23 million in FY 2023. The nationwide decline in FY 2023 reflected California’s policy shift, but totals climbed again in subsequent years as more states began collecting cannabis taxes (Figure 1).

California showcased the difficulty of changing tax structures.

When implementing cannabis taxes, states aim to generate revenue without driving prices so high that consumers turn to illegal markets. That’s why they experiment with various tax structures, including excise taxes on cannabis wholesale, cultivation and retail.

Even retail excise taxes often differ by product weight, THC content or form (such as “flower” or “vapor” products).

Washington and Montana each collect more than $50 per resident in cannabis excise taxes annually, the nation’s highest per capita revenue, driven by particularly high retail excise rates of 37% and 20%, respectively (Figure 2).

Alaska collects more than $30 per resident despite having no retail excise tax. Instead, the state relies solely on a $50-per-ounce cultivation tax applied when cannabis is transferred to licensed establishments.

States with recreational markets typically collect more revenue per resident than medical-only states, which are more common in the South.

Delaware and Minnesota have rapidly growing recreational markets.

Minnesota issued 324 new cannabis business licenses in 2025 and increased its excise tax rate from 10% to 15%. The state collected $34.44 million in FY26 compared to just $16.57 million in FY25. This is expected to increase more as the market expands.

Delaware began collecting cannabis excise taxes Aug. 1, 2025, at a rate of 15%. Revenue collections continue to rise as newly licensed businesses enter the marketplace.

The Census Bureau’s Quarterly Summary of State and Local Government Tax Revenue provides quarterly estimates of state and local government tax revenue at the national level, as well as detailed tax revenue data for individual states.