The Hidden Cost Of Legal Weed: Why Marijuana Taxes Are Hitting Your Wallet Harder Than You Think

As cannabis sales soar in states with legal markets, excise taxes have emerged as a crucial factor shaping the industry.

Unlike tobacco, cannabis remains free from federal excise taxes but faces significant state-level levies. The structure and scope of these taxes vary widely, often influencing market dynamics and consumer behavior.

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The Rise Of Retail-Level Taxes

In seven of the nine states projected to exceed $1 billion in 2024 cannabis sales—Arizona, California, Maryland, Massachusetts, Michigan, Missouri and Washington—excise taxes are imposed solely at the retail level. These taxes, such as Washington’s steep 37% rate and Massachusetts’ 10.75%, are directly visible to consumers at checkout, fostering transparency about the cost of legalization.

Retail-level taxation differs from traditional tobacco excise taxes, which often target distributors. …