Cannabis Sales Financial Impact | From California to Davis…
Why This Matters 🌿
When people buy legal cannabis in California and from The Good People Farms licensed cannabis delivery business, they’re not just purchasing a product—they’re also funding public programs, local services, and university research. For a community like Davis, where UC Davis, the City of Davis, and local businesses all intersect, cannabis tax dollars travel a surprisingly interesting route.
We’ll follow the money in three stops:
- The State of California
- The City of Davis
- UC Davis and its research programs
1. State of California 🌉
Since adult-use sales began in January 2018, California has become one of the largest legal cannabis markets in the world. With that has come serious tax revenue:
- By early 2024, the California Department of Tax and Fee Administration (CDTFA) reported that legal cannabis had generated about $6 billion in state cannabis tax revenue since 2018. [1] CDTFA
- By late 2025, news reports citing CDTFA data put the cumulative total at over $7.3 billion. [2] Desert Sun
Those dollars come mainly from:
- A state cannabis excise tax (historically 15%, moving to 19%)
- State sales tax on cannabis purchases [3] The Motley Fool+1
What the State Spends It On 💰➡️📚🌱🧬
Under California law, cannabis tax revenues are earmarked for specific purposes, including:
- Childcare and early education programs
- Youth substance-use prevention and treatment
- Environmental restoration and enforcement
- Public health & medical research, via the state’s Cannabis Tax Fund and academic research grant program [4] CDTFA+1
In other words, when someone buys legal cannabis in California, a slice of that purchase is automatically redirected into kids, communities, nature, and science.
2. City of Davis 🚲
(Insert City of Davis bicycle logo here)
Davis voters took an early, proactive role in shaping how local cannabis revenue would work.
Measure C – Davis’ Cannabis Business License Tax 🗳️
In June 2016, voters approved Measure C, which allows the City of Davis to charge up to a 10% business license tax on marijuana (cannabis) businesses based on their gross receipts. The City Council can set the rate lower, but it cannot exceed 10% without voter approval. [5] Ballotpedia+1
This tax is in addition to regular sales tax and other standard fees, and it flows into the City’s General Fund—the pot of money that supports day-to-day services.
How Much Money Has Come In? 💵
In the City’s own financial statements, cannabis tax revenue is blended together with the broader “Business License / Cannabis” line in the General Fund. We can’t perfectly separate “cannabis” from “other business licenses,” but we cansee how the combined category grows right after cannabis businesses go live.
According to the City of Davis Comprehensive/Annual Comprehensive Financial Reports for 2018–2021 [6]
Business License / Cannabis tax – General Fund revenue
- FY 2017–18: ≈ $2.0 million
- FY 2018–19: ≈ $2.6 million
- FY 2019–20: ≈ $3.4 million (line now labeled Business License/Cannabis)
- FY 2020–21: ≈ $4.8 million
Over those four years, this category brought in about $12.8 million in total revenue to the City’s General Fund.
In the 2021 report, the City explicitly notes that a large year-over-year jump in tax revenue—about $1.42 million—was driven primarily by cannabis tax receipts, confirming that cannabis businesses are now a significant, stable revenue source for Davis.
What Does Davis Use This Money For? 🏞️🚓🚴♀️
Because the cannabis/business license tax goes into the General Fund, it helps pay for things most residents experience every day, including:
- Public safety (police & fire services)
- Parks, bike paths, greenbelts, and recreation
- Street, sidewalk, and infrastructure maintenance
- Core city administration and planning
So every legal cannabis purchase in Davis is, indirectly, helping keep bike paths lit, parks maintained, and city services running.
3. UC Davis 🎓
Some cannabis tax dollars eventually loop back into research at UC Davis—a fitting twist for a world-class research university in a city that also hosts a vibrant, regulated cannabis industry.
State Cannabis Tax Fund ➝ Academic Research 🔬
Through California’s academic research grant program, a portion of state cannabis tax revenue is dedicated to funding public-university research. UC Davis has been a major beneficiary. [4] Department of Cannabis Control
From Department of Cannabis Control grant listings and UC Davis’ own Cannabis Economics Group, UC Davis has received roughly $4 million in cannabis-tax–funded research grants, including:
- A $856,881 project on the chemistry, toxicology, and health impacts of cannabinoids from vaping devices (public health & vaping research). [4] Department of Cannabis Control
- Multiple grants totaling $1.94 million for the UC Davis Cannabis Economics Group, studying pricing, tax structures, and the economics of California’s legal cannabis market. [7] cannabiseconomics.ucdavis.edu+2cannabiseconomics.ucdavis.edu+2
- Additional UC Davis grants on environmental impacts of cannabis cultivation and other public-health themes. [8] Cannabis Business Times
UC Davis also maintains detailed guidance on how cannabis and hemp research must comply with federal and state law—everything from DEA licensing to sourcing plant material. [9] Office of Research
In short: cannabis purchases in California help fund the very research that informs safer policies, better environmental practices, and more accurate public education.
The Good People Farms warmly welcomes researchers and educators from UC Davis to hold an educational session at our store to share insights gained from these grants.
Bringing It Home: Why This Story Matters to Davis 💚
For a Davis resident buying legal cannabis, here’s what’s really happening behind the scenes:
- At the state level, part of your purchase funds youth programs, environmental cleanup, public health, and research. [1–4]
- At the city level, Davis collects local cannabis/business license taxes that support parks, police, bike paths, and everyday city services. [5–6]
- At UC Davis, cannabis-tax grants power cutting-edge research on health, economics, and environmental impacts. [4,7–9]
As a Cannabis sativa L. lifestyle store, The Good People Farms is committed to helping our community understand both the plant and the policy—from hemp vs. cannabis education in our in-store materials. [7]
Next time someone asks, “Where do cannabis taxes even go?” you can answer:
“They go to California 🌉, Davis 🚲, and UC Davis 🎓—supporting kids, community services, and world-class research along the way.”
References
[1] California Department of Tax and Fee Administration. “California Department of Tax and Fee Administration Reports $259.9 Million in Cannabis Tax Revenue for First Quarter of 2024; Total Cannabis Revenue Since 2018.” CDTFA
[2] Desert Sun (Gannett). Coverage of CDTFA data showing more than $7.3 billion in total cannabis tax revenue collected by California since January 2018. Desert Sun
[3] The Motley Fool / research summary on California marijuana tax structure (excise and sales taxes). The Motley Fool+1
[4] California Department of Cannabis Control. “Academic Research – Cannabis Tax-Funded Grants.” Department of Cannabis Control
[5] Ballotpedia & Davis Vanguard coverage of City of Davis Measure C (2016), establishing a cannabis business license tax of up to 10% of gross receipts. Ballotpedia+1
[6] City of Davis, California. Comprehensive/Annual Comprehensive Financial Reports for fiscal years 2017–18, 2018–19, 2019–20, and 2020–21 (Business License/Cannabis revenue, General Fund).
[7] Internal educational material: “Cannabis sativa L. – Two Plants, One Species: Learn About the Similarities & Differences” (hemp vs. cannabis explainer used by The Good People Farms). Difference between Hemp & Cannabis
[8] “Bureau of Cannabis Control Announces Public University Grant Funding Recipients,” including UC Davis environmental-impact grant. Cannabis Business Times
[9] UC Davis Office of Research. “Cannabis and Hemp Research – Policy Guidance on Cannabis and Industrial Hemp Research at UC Davis.” Office of Research
