There are now four states in the U.S. that have legalized recreational marijuana, and these four states are projected to earn an annual $5 billion through taxes on cannabis sales.

The cannabis industry has been steadily improving in recent years, and 2021 will be no exception. Indeed, this year appears to be shaping up to be one of the most fruitful in terms of cannabis reform in the United States to date. 

Among the many recent industry developments, such as the Drug Enforcement Administration’s (DEA) push to review cannabis research applications and the House’s approval of cannabis-focused spending legislation, the legalization of recreational cannabis in four states is having a significant impact on the industry as a whole. 

Rather than a referendum, Connecticut, New Mexico, New York, and Virginia passed legislation to make the plant legal for adult use. They are following in the footsteps of Vermont, which in 2018 became the first state to legalize cannabis through legislation.

By the fourth year of operation, the four newly legalized states are expected to generate $4.5 billion in annual revenue. This is based on the MJBizFactbook’s sales projections.

Furthermore, thanks to the governor and lawmakers’ efforts, medical cannabis has been legalized in Alabama, and an additional $500 million in annual sales revenue is expected to be pumped into the US economy as time goes on.

As opposed to states relying solely on citizens to vote for legal cannabis, the growing number of states celebrating a victory for recreational cannabis shows how governors and lawmakers are steering legalization in the right direction. 

Let’s look at some key business facts and projections for those newly legal states:

1. New York City

New York will open its recreational cannabis market sometime next year. Analysts estimate that by the fourth year of operation, the industry will have generated $2.1 billion in annual sales.

Existing medical cannabis businesses in the state are welcome to join the recreational market if they pay a one-time “special licensing fee.” This fee is required to convert up to three medical cannabis dispensaries into dual medical-recreational facilities, and it is intended to support social equity programs.

Additionally, microbusinesses can set up vertical cannabis operations, which will help them scale their operations to a larger target market. Other cannabis companies are prohibited from vertical integration, according to critics who believe that this business model unfairly gives existing medical cannabis operators an advantage.

All cannabis products sold in New York’s recreational market will be taxed at a rate of 13%, with 9% going to the state and 4% to the municipalities.

Provisions for Basic Social Equity

Applicants who meet the criteria for social and economic equity will be eligible to apply for half of all adult-use cannabis business licenses in New York. These applicants will be given priority status to apply for a delivery or microbusiness license based on expert opinions.

Furthermore, 40 percent of the tax revenue generated by adult-use sales will be distributed to communities that have been disproportionately affected by the failed drug war. For the purpose of assisting with business operations and application preparation, waivers and low- or no-interest loans will be made available to social equity applicants.

2. The state of Connecticut

Connecticut will have another adult-use cannabis market next year. The market is expected to open in May 2022. Annual revenue is expected to reach $750 million in the fourth year of operation, once everything is running smoothly.


Medical cannabis cultivators currently operating in Connecticut may be able to apply for a recreational license as soon as this summer. It’s worth noting, however, that each applicant would be required to pay a $3 million fee, according to the Marijuana Policy Project. If the applicant creates at least two social equity joint ventures, the fee is reduced to $1.5 million.

Recreational cannabis operators in Connecticut must make a “good-faith effort” to participate in labor peace agreements with a union before receiving a final license.

Local governments can prohibit cannabis retail sales by enacting zoning legislation. Residents, on the other hand, can petition for a local referendum to approve adult-use cannabis stores.

In Connecticut, adult-use cannabis products will be subject to a 6.35 percent state sales tax, as well as taxes based on product potency. A 3% sales tax would be collected by municipalities that allow recreational cannabis sales.

Provisions for Basic Social Equity

In Connecticut, half of the adult-use cannabis business licenses will be set aside for social equity applicants. The majority of new licenses will be awarded through a lottery system, ensuring that all applicants have an equal chance to compete.

New Mexico is number three.

Cannabis consumers in New Mexico will be able to legally purchase their bud from the state’s adult-use retail stores beginning April 1, 2022. Annual sales are expected to reach $425 million by the fourth year of operation. Municipalities can limit the number of adult-use cannabis businesses, but they cannot be outright prohibited.

Vertical integration is possible for all micro-businesses operating in New Mexico’s adult-use cannabis market. Retail sales will be subject to a 12 percent excise tax, in addition to local and state sales taxes ranging from 5 to 9 percent. The excise tax will rise to 18 percent as time goes on.

Provisions for Basic Social Equity

The state is expected to develop a plan to ensure license equality and diversity for all applicants. Regulator agreements will also be hammered out to assist Native American communities in participating in the recreational cannabis market in New Mexico.

4. The state of Virginia

Virginians have a lot to look forward to, with a recreational cannabis market set to open on January 1, 2024. Analysts expect annual sales of around $1.3 billion by the fourth year of operation, benefiting the economy just as much as consumers.

Specific license caps for Virginia’s adult-use cannabis program will be implemented based on reenactments in 2022. The following are the details:

  • 450 sq. ft. of cultivation space
  • 400 retail outlets
  • 60 manufacturing establishments
  • 25 wholesalers

Only small companies with vertical integration will be allowed to participate in the state’s legal cannabis market.

Furthermore, adult-use cannabis product sales will be taxed at a rate of 21%. In addition, all goods will be subject to a 6% statutory state sales tax. Municipalities may impose an extra 3% surcharge. 

The Most Important Social Equity Provisions

Applicants in Virginia will be granted social equity licenses at an early stage of the licensing process. Those that qualify must hold at least a 66 percent interest in their company. Applicants that are accepted will be able to receive a low-interest loan to help them raise the funds needed to open a cannabis shop in Virginia.

The Future Seems to Be Getting Brighter

In terms of cannabis reform in the United States, the future seems to be a lot brighter. President Joe Biden’s candidate for head of the White House Office of National Drug Control Policy (ONDCP), Rahul Gupta, worked with multi-state cannabis operator Holistic Industries last year, according to new revelations. 

Furthermore, Senate Majority Leader Chuck Schumer (D-NY) is working on comprehensive federal cannabis reform legislation with Senate Finance Committee Chairman Ron Wyden (D-OR) and Senator Cory Booker (D-NJ). The Cannabis Administration and Opportunity Act (CAOA), which would declassify cannabis and establish a minimum purchase age of 21 years, is likely to be presented this autumn.


In the US, there are 4 states that have legalized cannabis for recreational use. These states are projected to earn an annual $5 billion from marijuana sales. Reference: leafly buzz.

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