Money cash currency dollars

Indiana Misses Out On $171 Million In Tax Revenue A Year Due To Cannabis Prohibition

Currently, Indiana does not permit medical or recreational cannabis commerce, with the exception of certain hemp-derived products containing low amounts of THC. Hemp commerce was legalized nationwide in the U.S. as part of the 2018 Farm Bill, including in Indiana.

However, in January 2023 Indiana Attorney General Todd Rokita issued an advisory opinion indicating that even low-THC hemp products remain illegal in Indiana, despite the 2018 Farm Bill. The advisory opinion is being challenged via litigation in Indiana. Meanwhile, hemp-derived products are big business in Indiana.

“About 540 Indiana retail stores and nearly 1,400 gas stations have sold about $637 million worth of hemp-based cannabinoid products, according to a 2023 study by hemp-cannabis data firm Whitney Economics. Those sales made a total economic impact of about $1.8 billion, the company found.” stated Marijuana Moment in its original reporting.

Indiana is bordered by Illinois and Michigan which both permit adult-use cannabis sales. Ohio also shares a border with Indiana, and legal adult-use sales may begin in Ohio any day. Indiana’s only neighboring state that does not permit adult use sales is Kentucky.

According to a 2020 analysis by the organization Tax Foundation, if Indiana were to adopt Colorado’s regulatory cannabis industry model, Indiana would generate $171 million annually from cannabis industry tax revenue.

For contextual purposes, Michigan’s legal cannabis industry generated $473,303,560 in cannabis tax revenue in 2023. Last year Illinois’ legal cannabis industry generated $552,166,729 in tax revenue – the second most in the United States, only behind California. Presumably some of those revenues came from purchases made by Indiana residents crossing the border.

The cost of prohibition in Indiana does not just involve the monetary opportunity cost of missed industry tax revenues. Indiana also spends a considerable sum enforcing cannabis prohibition policies, and those funds would obviously be saved if/when Indiana implemented a regulated industry.

According to the advocacy group Indiana Cann, “In 2010, Indiana taxpayers spent $38.5 million enforcing cannabis prohibitions, including $19 million in policing costs, $13.9 million in judicial and legal expenditures and $5.6 million in correctional expenditures.”

The United States adult-use cannabis industry has generated over $20 billion in total tax revenue since the first legal recreational cannabis purchase was made in Colorado on January 1st, 2014 according to a report by the Marijuana Policy Project.

“Through the first quarter of 2024, states have reported a combined total of more than $20 billion in tax revenue from legal, adult-use cannabis sales. In 2023 alone, legalization states generated more than $4 billion in cannabis tax revenue from adult-use sales, which is the most revenue generated by cannabis sales in a single year.” the Marijuana Policy Project stated in a press release.

79% of people living in the United States lived in a county with at least one regulated cannabis dispensary according to an analysis by the Pew Research Center. The Pew Research Center also found the following:

  • 74% of people in the U.S. live in a state where recreational or medical cannabis is legal
  • There are nearly 15,000 cannabis dispensaries in the U.S.
  • California has the most overall dispensaries (3,659)
  • Oklahoma has the most dispensaries per capita (36 dispensaries for every 100,000 residents)

Total legal cannabis sales in the United States are expected to reach $31.4 billion in 2024 according to a recent analysis by Whitney Economics. Additionally, leading cannabis jobs platform Vangst, in conjunction with Whitney Economics, estimates that the legal cannabis industry now supports 440,445 full time-equivalent cannabis jobs in the United States.

Whitney Economics also projects the following legal cannabis sales figures in the United States for the coming years:

  • 2024: $31.4 billion (9.1% growth from 2023)
  • 2025: $35.2 billion (12.1% growth from 2024)
  • 2030: $67.2 billion
  • 2035: $87.0 billion

The emerging legal cannabis industry in the United States is projected to add roughly $112 billion to the nation’s economy in 2024 according to an analysis by MJBiz Daily. The projection is part of the company’s 2024 MJBiz Factbook.

“The total U.S. economic impact generated by regulated marijuana sales could top $112.4 billion in 2024, about 12% more than last year,” MJBiz stated in its initial reporting.