The economic impact of cannabis sales on states

February 7, 2025

Here in the Commonwealth, lawmakers are still trying to pass a bill that would make the sale of recreational marijuana legal. Virginia adults can use, possess, share, and even grow marijuana, but the laws are unclear on how to obtain marijuana or its seeds for personal use without a medical certification from a practitioner.

Legislation has recently passed through Virginia’s House and Senate that would allow the market sale of marijuana. However, Gov. Glenn Youngkin has vetoed bills related to the sale of recreational marijuana in the past.

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Legalizing recreational sales in other states has shown many benefits for local economies. For example, Colorado, one of the first states to legalize recreational marijuana, has a 15% state sales tax and a 15% excise tax on marijuana. Ten percent of the state sales tax is distributed to local governments, and the excise tax goes directly to public school construction, according to the Colorado Department of Revenue.

In Washington, there is a 37% excise tax on the sale of cannabis, the highest flat percentage of any U.S. state. The city or county decides how some of the revenue is distributed, while the state distributes the rest of the funds to various causes, according to the City of Vancouver, Washington:

  • State healthcare services/Medicaid
  • The state general fund
  • Licensing and enforcement efforts
  • Education and prevention programs
  • Recreational marijuana research and pesticide testing
  • City and county governments

A bill that attempted to legalize the market sale of marijuana in 2024 set an 8% tax on marijuana sales, on top of the state sales and use tax of 1.115%. The bill designated that 10% of the marijuana tax would go toward pre-K programs, 60% would go to the Cannabis Equity Reinvestment Fund, 25% would go toward aiding substance use disorder, and the last 5% would go toward Virginia public health programs. The bill was vetoed by Gov. Youngkin in March 2024.

 

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