Cannabis tax revenues accounted for more than 1% of the total tax revenues in Alaska (1.5%), Colorado (1.3%), and Montana (1.4%) during calendar-based 3Q23, while it stood between 0.7% and 0.9% in six states, namely, Arizona, Maine, Michigan, Oregon, Vermont and Washington, as per the US Census Bureau data.

Notably, in 2Q23, there were five states where cannabis tax revenues represented more than 1% of the state’s total tax revenues, including Oregon (3.2%), Michigan (2.2%), Illinois (2%), Alaska (1.3%) and Colorado (1.2%), as reported.

Debtwire Municipals highlights the following trends from the recent 3Q23 cannabis sales tax collection data released by the US Census Bureau and various state agencies:

Pioneer states like California show improvement

As discussed in the previous 2Q23 report, the cannabis market in pioneer states (i.e., those who were among the first to legalize recreational use such as Colorado, Washington, Oregon, and California) may have peaked in the near term as most of them recorded YoY declines. Nonetheless, 3Q23 data showed signs of improvement, indicating that the worst may be over for these states.

For example, after having reported a 43% decline in cannabis tax collections in the first half of the year, California registered a YoY marginal increase in 3Q23 to USD 166.6m. However, for the nine months ended 30 September (9M23), cannabis tax revenues remained 31% lower YoY at USD 406m.

Similarly in Oregon, 3Q23 collections jumped 12% YoY even as they remained down over 1% for 9M23. Meanwhile, the 3Q23 declines in Colorado (down 12% YoY) and Washington (down 2%) were at a lower rate than the 9M23 period, for which cannabis tax revenues remained 17% and 6% lower, respectively.

Midwest and Northeast are thriving

In the midwestern region, Michigan has continued its recent trend of robust growth, with 3Q23 cannabis tax revenues surpassing states like Colorado, Illinois, and Oregon. At the same time, Missouri which legalized recreational cannabis this year, continues to record exceptional revenue growth, while Illinois has held steady despite moderate declines.

States in the Northeast, including Maine, Massachusetts, New Jersey, and New York, are generally thriving, with robust growth in both 3Q23 and 9M23.

The table below lists the 3Q23, 3Q22, 9M23, and 9M22 cannabis tax collection for states where adult recreational use sales are legalized:

Notes: 

(1) While Connecticut, Delaware, Maryland, Minnesota, New Mexico, and Virginia also allow recreational cannabis sales, 3Q23 cannabis tax collection data is not available.

(2) Nevada and New Jersey’s 3Q23 data is sourced from the state revenue department websites, all other data is sourced from the US Census Bureau’s experimental database.

(3) Rhode Island, and Vermont: With adult-use sales starting in late 2022 and 2023, the data is insufficient to make YoY comparisons.

Ballot measures in 2024

Looking ahead at 2024, there are at least eight ballot measures under process pertaining to various cannabis legalization initiatives, as per data compiled from Ballotpedia.

Among key proposals, Florida is considering a constitutional amendment to legalize recreational marijuana for adults, while Idaho is aiming to establish a medical marijuana program through a state statute. Missouri, like Florida, is exploring a constitutional amendment to redefine marijuana and eliminate associated regulations.

In Nebraska, three initiatives are underway—a constitutional amendment to legalize cannabis, and two state statutes. South Dakota has two initiatives: a state statute to legalize recreational marijuana, as well as a veto referendum seeking to repeal the 2020-approved medical marijuana program.

The table below lists potential or certified ballot measures for the 2024 elections:

Debtwire Municipals’ Eye on Data reports consist of numerical information and related commentary that together illustrate and explain critical issues facing the US municipal bond market. Eye on Data reports are also frequently used to capture salient credit characteristics of an upcoming bond issue.