Weed tax revenues approach $100M mark after 2 years of recreational sales

Tax revenues from marijuana sales are on pace to cross the $100 million-mark this month, two years since the recreational weed market launched in Montana. 

Combined medical and recreational marijuana sales since that January 2022 launch have reached nearly $623 million, according to reports available online from the Montana Department of Revenue. Recreational marijuana sales is the clear driver of the sales figures, accounting for $468 million of that total compared to $154 million in medical marijuana sold since recreational cannabis became available. 

Yellowstone County, the state’s largest, has consistently sold the most marijuana since legalization despite a prohibition on recreational cannabis sales within city limits, where most of the county’s 167,000 residents live. Gallatin County closely follows Yellowstone in monthly sales totals. Missoula, Flathead, Cascade, Lewis and Clark and Silver Bow counties account for the highest sales figures. 

For example, those county’s marijuana sales in December were:

• Yellowstone: $4,704,784
• Gallatin: $4,102,896
• Missoula: $3,281,144
• Flathead: $2,671,060
• Cascade: $1,801,107
• Lewis and Clark: $1,784,810
• Silver Bow: $1,202,754

Barring any catastrophic developments, Montana’s tax revenues on weed sales will surpass $100 million this month. Monthly statewide sales have held steady between $24 and $28 million since the recreational market opened alongside the longstanding medical marijuana market. 

Local communities are sharing in the revenues as well: All but three counties that allow recreational marijuana sales have enacted local-level taxes on those purchases. 

“It’s a healthy market,” Kate Cholewa, government affairs specialist for the Montana Cannabis Industry Association, said of the general stability in sales. “Those numbers make sense, they meet what we would have expected.”

Few changes have been made to the consumer aspect since recreational marijuana became available for purchase at the start of 2022. Still, the industry has felt the changes come about through legislation or administrative rules from the Department of Revenue, where the Cannabis Control Division executes regulation over the industry. As the Republican Legislature set out to achieve following the 2020 vote to legalize recreational use, regulations are tight on providers, which need to transport their product around the state to be tested, manufactured into different products and eventually sold off a shelf.

“I think that businesses are held to a level of precision that very few in any regulatory industry could live up to,” Cholewa said. “There’s very little room for minor, administrative errors.”

That translates to a lot of staff time spent on compliance with state laws and evolving rules. J.D. “Pepper” Petersen was the front-man of the 2020 legalization campaign and manages The Cannabis Corner in Helena. On Wednesday he pointed to a study the campaign commissioned in 2020 that forecast roughly $52 million a year in state tax revenue, a near-perfect projection of the $100 million in revenues captured over the last two years. 

“What that means is we’ve delivered on our promises as an industry,” Petersen said. Today he heads another trade group as president of the Montana Cannabis Guild. “We’ve created the tax revenue we promised. We’ve created an environment that’s respectful of the law. We’ve delivered on every single promise. That $100 million dollars is respective of that.”

Petersen said in the last two years he’s seen consumers and businesses settle more and more into place. People become attached to certain products or brands, while providers figure out what products bring value to their enterprise.

“Now that these transactions are done in the light of day, there’s a lot more safety and accountability that exists, and those are positive developments,” he said.