Four states and the District of Columbia have voted since 2012 to legalize the retail sale of marijuana. One main incentive of legalization is the tax revenue states receive from marijuana sales. The first two states to legalize marijuana — Colorado and Washington — began sales in 2014. After a slow start, tax revenues now exceed expectations in both states.

While the legal structure supporting marijuana sales would be quite different in each U.S. region, other states can begin to better understand the financial impact legalization would have on their states. The Tax Foundation used sales per capita in these two states and the assumption of a 25% effective tax rate to determine the potential tax revenue from marijuana sales in each state.

While tax revenue from marijuana sales exceeded expectations in both Colorado and Washington, the revenue increase remains small relative to the overall state tax revenue. This could...