Where Does Vermont's Cannabis Tax Revenue Actually Go?

Every time you buy cannabis at a Vermont dispensary, you pay two taxes: a 14% cannabis excise tax and a 6% state sales tax. On a $100 purchase, that's $20 going to the state. Multiply by a market that did over $200 million in retail sales in 2025 and the numbers become real.

Where does that money actually go? Here's what the statute says, what the allocations look like, and what the outcomes appear to be.

The statutory allocation

Vermont's cannabis tax revenue is directed by statute to several funds:

• Education Fund: A significant portion of cannabis sales tax revenue flows to Vermont's Education Fund, which supports K-12 public education across the state. This is the single largest allocation.
• Substance Misuse Prevention Fund: A dedicated percentage of excise tax revenue is directed to programs that prevent and treat substance use disorders, with particular emphasis on youth prevention and adult recovery services.
• After-School and Summer Programming: A portion supports after-school programs, with a focus on opportunities for at-risk youth.
• Cannabis Control Board operations: The CCB itself is funded partly through cannabis fees and tax revenue, covering licensing, inspection, compliance, and industry oversight.
• Local governments: Municipalities that have opted into retail cannabis sales receive a share of local sales tax revenue (where applicable), and a modest redistribution formula sends some state revenue back to the host communities of licensed operators.

The specific percentages shift based on legislative updates. The 2024 legislative session made adjustments to the allocation formula, with advocacy groups pushing for more toward substance-use treatment and social equity programs.

The numbers

Vermont's cannabis retail market has grown each year since legal sales launched in October 2022. Rough estimates of annual tax revenue:

• FY 2023: First partial year; tax revenue in the low millions.
• FY 2024: Excise + sales tax combined in the $15–$25M range.
• FY 2025: Estimated $30–$45M combined.
• FY 2026 (projected): $40–$55M combined, with continued growth.

These are rough figures based on public reporting from the Vermont Department of Taxes and industry analysts. Exact numbers depend on revenue type and reporting methodology.

What the money has funded, practically

This is where the picture gets fuzzier. Vermont does not currently publish a line-item breakdown of cannabis-tax-funded programs, so it's hard to point at a specific substance-use prevention program and say "this exists because of cannabis tax dollars."

What is visible:

• Expanded Blueprint program funding. Vermont's health care coordination program received allocations from cannabis revenue in some years, supporting substance-use treatment integration.
• After-school program expansion. The Afterschool Alliance and several community-based youth programs received funding from cannabis tax flows, expanding capacity in underserved areas.
• Education Fund contributions. These go into the general education formula and are not earmarked for specific programs, so the impact is distributed across schools statewide.
• CCB operations. The regulatory body that processes licenses, conducts inspections, and enforces compliance is partly funded by cannabis revenue — meaning the industry is substantially self-funding its own regulation.

What critics say

Advocacy organizations and some legislators argue that Vermont's allocation is too heavily weighted toward general-fund uses (education, general municipal support) and too lightly weighted toward cannabis-specific priorities — especially social equity programs, expungement support, and reparative investment in communities harmed by cannabis prohibition.

The counterargument is that Vermont, like many states, treats cannabis revenue as revenue. Once it's in the pot, it's subject to the same legislative priorities as any other tax dollar. That's a defensible position, but it means the "cannabis tax" label doesn't translate cleanly into "cannabis policy funding."

Comparison to other states

Vermont's allocation looks modest next to some peers. Colorado, which has had legal recreational sales since 2014, has cumulatively collected over $2 billion in cannabis taxes — directing substantial portions to school construction (the BEST fund), mental health programs, and local governments. California's much larger market has distributed billions to youth programs, environmental restoration, and community reinvestment.

Vermont's smaller market produces smaller revenue by scale. But the allocation frameworks in Colorado and California are also more explicit and more publicly trackable than Vermont's.

Expungement

This is a specific policy ask that some advocates want tied to cannabis tax revenue. Vermont automatically expunges some low-level cannabis convictions, but the process isn't universal, and connecting cannabis-industry tax dollars to the cost of processing expungements is a reasonable alignment of cause and effect. Legislative proposals to explicitly fund expungement work from cannabis revenue have been introduced but haven't passed as of 2026.

Municipal opt-in dynamics

Vermont municipalities have to opt in for retail cannabis sales. Those that have done so receive some tax revenue, but not all Vermont towns have opted in, meaning significant portions of the state generate no cannabis retail activity. This creates a small local-revenue incentive for opt-in, which has slowly expanded the retail footprint — but the incentive is modest compared to what larger-market states offer.

What a shopper can notice

The practical reality: when you pay $5 in excise tax on a $35 eighth, roughly speaking, some portion goes to schools, some to substance-use programs, some to the CCB, and some to local government. You're not going to see it as a distinct line item anywhere, but it is a real revenue stream that's growing every year and shaping Vermont's fiscal picture in small, diffuse ways.

The transparency ask

If there's a policy ask worth supporting, it's this: Vermont should publish an annual report detailing cannabis tax revenue flows, fund allocations, and specific programs funded. This exists piecemeal but not as a single public document. A transparent dashboard would build public trust in the allocation process and make it easier to evaluate whether the money is being used well.

Sources: Vermont Department of Taxes; Act 164; annual legislative appropriations; Vermont Cannabis Control Board.