In this article, we are going to discuss the 24 states that legalized recreational weed in the US. You can skip our detailed analysis of the cannabis industry in America, the effect of legalization on prices, and the fastest growing category in the cannabis industry, and go directly to 5 States that Legalized Recreational Weed in the US.
The history of cannabis cultivation in America dates back to the early colonists, who grew hemp for textiles and rope. Cannabis was also widely used as a patent medicine during the 19th and early 20th centuries, described in the United States Pharmacopeia for the first time in 1850. Political and racial factors led to the criminalization of marijuana in 1937, with the passage of the Marijuana Tax Act, though its legal status is now changing in many places.
Cannabis Industry in America:
The United States of America is the country that buys the most weed in the world. The U.S. legal cannabis industry took some hits in 2022, but as we mentioned in our article – 35 Cities with the Highest Weed Consumption per Capita– annual revenue of the industry is estimated to reach $31.8 billion by the end of 2023, growing to $50.7 billion by 2028. The increasing legalization of cannabis and rising acceptance of its use for medical purposes are the key factors driving the growth of the market.
Growth is also expected to come from new states. In the first two months of 2023, three states began cannabis sales – two adult-use (Connecticut and Maryland) and one medical (Mississippi). As of December 2023, 24 states have legalized recreational weed in America, in addition to the District of Columbia.
Effect of Legalization on Prices:
All the diverse effects of legalizing recreational marijuana may not be clear for a number of years, but one consequence has become evident almost immediately – Pot has never been so cheap. The retail price of a gram of cannabis dropped 13% to $9.43 in Q3 of 2022 from $10.83 in the same period the previous year – the steepest fall ever seen for marijuana in a 1-year period.
In some cases, legalizing cannabis has caused its prices to drop by up to 90%, when compared with prices during prohibition. At the peak in the 90’s, you could get $6,000 a pound for indoor OG Kush in California. Right now, farmers are reportedly getting $600 a pound for that very same strain. Notably, even high taxes on legal marijuana don’t keep the legal price anywhere near what it was when the drug was more broadly illegal.
The major reason for this drastic decrease is Econ 101 – Supply and Demand. As the cannabis industry has boomed since legalization started a few years ago, more and more players have popped up to grab their slice of the sweet green ganja pie, which has resulted in an increasing number of growers producing more weed than stores know what to do with. The black market is also forced to drive prices down as the legal market gets more competitive.
Competition among cannabis growers is also increasing as more cities allow operations. In 2021, the number of municipalities allowing marijuana businesses jumped to 118 from 87 in Michigan alone, while the number of licensed businesses jumped by nearly 150 to 1,238. Between 2020 and 2022, the number of growers nearly quadrupled to 1,238, and more than a third of those – 458 – are classified as Class C, larger operations that can harvest 2,000 to 10,000 plants.
Legalizing the plant also opens doors to more innovation. Cannabis is an annual plant that gets planted in the spring and usually harvested in the fall. But farmers figured out that they could trick the plant into flowering early by depriving it of light and creating ‘longer nights’. This is done by throwing tarps over a greenhouse while the day is still going, making the plant think that it’s actually the fall and the night is really long. Light Deprivation has completely revolutionized cannabis cultivation and consumers will now be able to have the best products year-round and pay very low prices for it.
Prohibition imposes huge costs on drug producing industries that are passed on to consumers in the form of higher prices. These higher prices are among the principal reasons (the others being stigma and fear of punishment) that illegal drugs are used so much less frequently than legal drugs such as alcohol and tobacco. Marijuana is a rare example where we can see the impact of legalizing a drug in real time, which shows that if the production and sale of heroin and cocaine etc. were also legalized, those drugs would also become dramatically cheaper.
Fastest Growing Category in the Cannabis Industry:
The cannabis drinks segment is the fastest-growing area of the industry. According to Research and Markets, the global market for cannabis beverages was estimated at $1 billion in 2022 and is projected to reach $2 billion by 2026, growing at a CAGR of 16.9% over the forecast period.
The United States accounts for a 70.9% share in the global cannabis drinks market. The CBD-infused beverages are gaining popularity in the U.S. where they are becoming easily available through mainstream retail outlets. The growing interest in wellness drinks is also likely to drive gains in the market. Weed infused beverages are popping up in more places, with major drinks makers, including Constellation Brands, Inc. (NYSE:STZ) and Anheuser-Busch InBev SA/NV (NYSE:BUD), already looking to make their mark. However, these efforts have not always gone to plan.
The New York-based Constellation Brands, Inc. (NYSE:STZ) invested $4 billion in Canopy Growth and launched its first CBD drinks brand called Quatreu in the U.S. five years ago. However, the move hasn’t had the positive impact the company hoped for and last year, Constellation took a $1.1 billion non-cash impairment charge on Canopy and a $651 million equity loss.
Similarly, the beer behemoth Anheuser-Busch InBev SA/NV (NYSE:BUD) also entered the market for cannabis infused drinks in December 2018 in a $50 million joint-venture with Tilray Brands. Again, things didn’t turn out so well for the venture – called Fluent Beverage Co. – and the two companies decided to part ways last year.
With that said, here are the U.S. States with Legalized Recreational Marijuana.
24 States that Legalized Recreational Weed in the US
Photo by terre-di-cannabis on Unsplash
Methodology:
To collect data for this article, we referred to sources such as Washington Post, MJBizDaily, Business Insider etc., looking for States with Legal Recreational Weed. The following states have been arranged in the chronological order of when they approved the legalization of recreational cannabis.
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24. Ohio
Legalization Measure Approved: November 2023
On November 7th 2023, Ohio became the twenty-fourth state in the United States to legalize the recreational possession and use of marijuana. The law went into effect on December 7th and it is estimated that by the fifth year of legalization, the Buckeye State could be bringing in between $276 million to $403 million in tax revenue from adult-use cannabis. Cleveland ranks among the Cities with the Highest Weed Consumption per Capita.
Ohio is the Latest State to Legalize Recreational Weed in America.
23. Minnesota
Legalization Measure Approved: May 2023
On the 30th of May 2023, Gov. Tim Walz signed an expansive cannabis legalization bill into law, allowing the recreational use of cannabis for adults 21 and older starting August 1st 2023. At least three tribal nations in Minnesota have already opened dispensaries for recreational marijuana, using their tribal sovereignty to allow sales. However, most other businesses aren’t expected to sell legal recreational weed until early 2025, as the state sets up a licensing and regulatory system for the new industry.
22. Delaware
Legalization Measure Approved: April 2023
On April 13, 2023, Delaware became the 22nd state to legalize recreational marijuana use. The new regulations authorize the operation of 30 marijuana retail outlets in the state, beginning around September of 2024. A total of 60 cultivator licenses, 30 manufacturing licenses, and 5 testing licenses will be available with most biannual licenses carrying a $10,000 fee.
Delaware was the first State that Legalized Marijuana in 2023.
21. Missouri
Legalization Measure Approved: November 2022
The state of Missouri has recorded over $500 million in sales since the first licensed sale of recreational cannabis occurred on February 3, 2023. St. Louis County projects as much as $3 million in marijuana-related sales tax revenue in 2024.
20. Maryland
Legalization Measure Approved: November 2022
On November 8th 2022, Maryland voters approved a referendum to legalize marijuana for adult use. Maryland brought in more than $12 million in marijuana tax revenue during the first three months of legal cannabis sales to adults, which kicked off on July 1st 2023.
19. Rhode Island
Legalization Measure Approved: May 2022
Rhode Island became the 19th state to legalize recreational marijuana last year, when Gov. Dan McKee signed a bill into law that, in part, set up a framework for retail sales and taxation. That framework included establishing a Cannabis Control Commision to oversee and regulate the industry.
Weed has been legal for recreational use in Connecticut since July 1st 2021. However, adult-use cannabis sales officially began across the state on Jan 10th 2023. During the first month for the adult use market, over $5 million was made in cannabis sales, which then doubled to $10 million in May. While legal cannabis sales have been going up, there has been a downturn in prices.
Connecticut sits among the States with Legal Weed Going into 2024.
17. New Mexico
Legalization Measure Approved: April 2021
The first recreational dispensaries began licensed sales of cannabis in the Land of Enchantment on April 1st 2022. Gov. Michelle Lujan Grisham announced in April that the state of New Mexico saw $300 million in adult-use cannabis sales in its first year. In one year, the state issued 2,000 cannabis licenses across New Mexico, including 633 cannabis retailers, 351 producers, 451 micro producers, and 507 manufacturers.
16. Virginia
Legalization Measure Approved: April 2021
While having marijuana is legal in the Old Dominion, recreational sales are not, leaving people eager to smoke with few legal options to get their hands on some ganja. Although the initial goal was to initiate legal sales of the bud on January 1st 2024, that doesn’t seem like a possibility anymore as the proposed bills aimed at regulating sales failed in 2022 and again in 2023.
Virginia is one of the States with Legal Adult-Use Cannabis.
15. New York
Legalization Measure Approved: March 2021
An estimated 1.6 million Empire State adults aged 18 and older (12.8%) report using cannabis in the past 30 days, while an estimated 6% of adults consume cannabis daily or near daily.
Legal cannabis is expected to generate 63,000 jobs across New York by 2025, according to an estimate by CannabizTeam, an industry executive search and staffing firm. The creation of new jobs would be a boon for New York City, which has lagged behind the rest of the country in recovering employment lost during the pandemic.
Arizona is one of the more progressive states when it comes to cannabis banking. However, It is a restrictive and expensive environment. Once a bank notifies regulators that it is working with cannabis-related businesses, the bank is designated as a CRB. The CRB banks are subject to more oversight by the FDIC, and hence charge higher fees for their services.
Adult-use cannabis sales in 2022 reached $950 million, soaring to 70% of the Grand Canyon State’s total marijuana sales for the year.
13. Montana
Legalization Measure Approved: November 2020
Montana marijuana retailers sold $202.9 million worth of recreational cannabis in 2022, the first year of the state’s adult-use program. Including medical marijuana sales, the state witnessed around $303.6 million in cannabis sales last year. The tax revenue generated for the Treasure State in 2022 was $3.8 million on medical marijuana sales and $41.9 million on adult-use cannabis sales.
12. New Jersey
Legalization Measure Approved: November 2020
New Jersey was among four new states to simultaneously back marijuana legalization measures on Election Day 2020. Around one-third of New Jersey’s adults are now using weed, and most of them are getting it legally. The Garden State’s licensed retail cannabis market cashed in $555 million in 2022.
New Jersey is counted among the U.S. States that Legalized Weed.
11. Illinois
Legalization Measure Approved: May 2019
Recreational marijuana sales in Illinois finished 2022 with more than $1.5 billion, up 13% more than 2021. The Prairie State also made $562 million in taxes from cannabis last year.
Illinois is trying to level the playing field in the cannabis industry and since last November, more than two dozen operators have won social equity dispensary licenses – designed to create space in the industry for entrepreneurs from disadvantaged backgrounds.
According to a 2022 cannabis industry job report, Michigan ranks 3rd in the country by the number of people employed in its cannabis industry. However, as the industry continues to boom, some companies are beginning to fall behind.
Skymint – one of the biggest producers in Michigan – entered into receivership in March after defaulting on a $127 million loan. This is the fifth cannabis company in the Great Lake State to recently enter into receivership.
9. Vermont
Legalization Measure Approved: January 2018
Recreational cannabis sales have been legal in Vermont since October 2022. In its first year of operation, the state’s Cannabis Control Board has licensed over 300 cultivators – a vast majority of them being small tier one classifications. At the same time, more than 50 retail stores are now up and running in the Green Mountain State, with more on the way.
Vermont is placed among the States with Legal Recreational Cannabis.
8. Nevada
Legalization Measure Approved: November 2016
While recreational marijuana has been legalized in Nevada, it is only legal if you are 21+ and smoking in a private residence. No hotel allows guests to smoke weed within its premises and that has pushed consumption onto the Strip, into parking lots, and really pretty much everywhere outside around the city.
As a solution, marijuana consumption lounges were approved in September 2022 in Las Vegas and Clark County. The lounges will be a lot like bars – which can’t sell alcohol – where residents and tourists can legally smoke cannabis products.
7. Massachusetts
Legalization Measure Approved: November 2016
The legal marijuana industry in Massachusetts is showing signs of maturing. In five years since the first recreational dispensary in the state opened in Northampton in 2018, gross sales of non-medical marijuana in Massachusetts hit $4 billion. In just the first five months of 2023, gross sales totaled $600 million.
But prices have plummeted. An ounce of marijuana flower sells for $171, according to the state’s Cannabis Control Commission. As recently as two years ago, the price was $400 per ounce.
6. Maine
Legalization Measure Approved: November 2016
According to data from Maine’s Office of Cannabis Policy, nearly $159 million of cannabis products were sold in the state in 2022, almost double of the $82 million in sales recorded a year earlier.
The Pine Tree State has also witnessed a 20% increase in the number of dispensaries over the last year. Maine imposes a 15% excise tax and a 10% sales tax on marijuana.
Maine is counted among the States with Legalized Marijuana in the U.S.
