3 states increase cannabis levies as ideal tax rate remains elusive

Three states are raising cannabis taxes this year in response to budget deficits, with more predicted shortfalls looming in 2026 as consumer spending stalls and President Donald Trump’s signature spending bill hammers state and local government balance sheets.If that sounds like unwelcome news to the U.S.

marijuana industry, consider: If governors and lawmakers across the country had their way, three other states likely would have increased their cannabis taxes. ADVERTISEMENT The tax increases in California, Maine and Minnesota are the latest instance of state governments turning to cannabis to balance budgets in an era when revenue from local and federal sources is dwindling.

But they’re also the latest tests in an ongoing experiment that’s seeking the elusive answer to a fundamental question: What’s the ideal number for marijuana taxes that ensures meaningful government revenue while also encouraging legal market growth? Or, put another way: How much are consumers willing to pay at a state-licensed store before they’ve had enough? Different markets, different cannabis tax numbers There’s no universal answer, according to experts who spoke with MJBizDaily.As a nationwide survey of cannabis tax rates indicates, what might be reasonable in one state could be outrageous in another.

But observers are nonetheless raising a collective eyebrow at state governments’ willingness to turn to their still-young, regulated marijuana industries as a ready source of cash.And, they stress, additional taxation without either the appetite or the funding for a crackdown on a freshly incentivized illicit market might backfire.

“I’m kind of surprised so many jurisdictions are doing it,” said Patrick Oglesby, a North Carolina-based attorney and researcher at The Center for New Revenue who has advised several state governments on cannabis taxation.“It’s like cutting off the cat’s tail one inch at a time.�...