Marijuana Tax Revenue in Kansas

Tax revenue from the legalization of marijuana won’t make much difference, despite boosters’ claims.

When advocating for legal marijuana in Kansas, supporters point to increased tax revenue as a compelling benefit to the state. But it may not make much difference.

How might we guess how much tax revenue marijuana could bring to Kansas? I looked to Colorado. After gathering data from Colorado state government, I calculated that the state collected $75.25 per person in marijuana taxes and fees on both medical and recreational purchases in 2021. Applying that rate to the Kansas population results in $221 million in potential tax revenue. For context, in fiscal year 2021 Kansas collected $8,908 million in taxes that went to the general fund. $221 million in potential marijuana tax is about 2.5 percent of that total.

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This calculation relies on large assumptions that may not hold: That Kansas would tax marijuana at the same rate as Colorado and that Kansans would purchase marijuana at the same rate as Coloradoans. It also ignores the costs of a new taxing and enforcement regime and lost alcohol taxes to the extent people substitute marijuana for alcohol. There are many reasons to make marijuana legal for both medical and recreation, but gobs of tax revenue is not and should not be a reason.

By the way, Kansas already taxes marijuana. The Department of Revenue reminds us: “The fact that dealing with and possessing marijuana and controlled substances is illegal does not exempt it from taxation.” The Kansas drug tax produced $6,305 in December 2021.

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