In recent years, the legalization of cannabis for recreational use has emerged as a significant economic driver across the United States, generating billions in tax revenue that states have funneled into essential public services. As of 2025, states with adult-use markets have collectively amassed nearly $25 billion in tax revenue from legal cannabis sales since the first markets launched in 2014. In 2024 alone, these states collected over $4.4 billion, highlighting the industry’s rapid growth and fiscal potential. While Texas has made strides in expanding its medical cannabis program—becoming the 40th state to legalize it for medical purposes in June 2025 with the signing of HB 46—the state has yet to embrace recreational legalization. This leaves untapped revenue on the table that could address one of Texas’ most pressing issues: its aging and strained infrastructure.
The 2025 Texas Infrastructure Report Card, issued by the American Society of Civil Engineers, paints a sobering picture, assigning the state an overall grade of “C” across 16 categories, indicating mediocre performance with room for improvement in areas like roads, water systems, and energy grids. With a booming population and economy, Texas faces escalating demands on its infrastructure, exacerbated by natural disasters and urban expansion. If Texas were to legalize recreational cannabis and implement a robust tax structure—similar to those in states like California, Colorado, and Arizona—the resulting revenue could provide a dedicated funding stream to tackle these deficiencies. Nationwide projections suggest that full legalization could yield up to $8.5 billion annually in state revenues, with Texas potentially capturing a substantial share given its size and market potential.
Lessons from Other States: Cannabis Revenue in Action
States that have legalized recreational cannabis have demonstrated innovative ways to allocate tax proceeds, often prioritizing infrastructure to support long-term growth. For example, Arizona directs about 25.4% of its cannabis excise tax revenue to the Highway User Revenue Fund, which supports road maintenance and expansion—contributing nearly $290 million in fiscal 2024 alone. Colorado, a pioneer in legalization, has channeled over $2.4 billion since 2014 into school construction and repairs through programs like the Building Excellent Schools Today (BEST) fund, treating educational facilities as critical infrastructure.
In Pennsylvania, discussions around legalization emphasize using revenue to solve public transit funding crises, projecting up to $2.1 billion in first-year sales to bolster buses, trains, and related infrastructure. These models show how cannabis taxes—typically including excise taxes of 10-37% plus sales taxes—can be earmarked for specific infrastructure improvements, reducing reliance on general funds or bonds.
Texas’ Infrastructure Challenges: Where Cannabis Revenue Could Make a Difference
Texas’ infrastructure woes are well-documented, with the 2025 report card highlighting vulnerabilities in multiple sectors amid rapid growth. The state leads the nation in construction spending for 2025, yet funding gaps persist, particularly in addressing population-driven demands. Legalizing recreational cannabis could generate hundreds of millions to billions annually—potentially rivaling top earners like California—providing a stable, voter-popular revenue source without broad tax hikes. Below are key areas where this funding could be transformative:
Transportation: Roads, Bridges, and Public Transit
Texas boasts the largest highway system in the U.S., but it earned a “C-” in the report card due to congestion, maintenance backlogs, and aging bridges. With urban areas like Houston and Dallas facing severe traffic, cannabis revenue could mirror Arizona’s approach by funding highway expansions, bridge repairs, and public transit enhancements. For instance, allocating funds to the Texas Department of Transportation could accelerate projects under the Unified Transportation Program, reducing commute times and boosting economic productivity.
Water Systems: Supply and Flood Control
Water infrastructure received a “C” grade, with Texas needing at least $154 billion over the coming decades to address shortages, aging pipes, and flood risks. Events like recent floods emphasize the urgency. Revenue could support the Texas Water Development Board’s initiatives, such as reservoir construction, desalination plants, and stormwater management. This would enhance resilience in vulnerable regions like the Gulf Coast and arid West Texas.
Energy Grid: Reliability and Modernization
The energy category dropped to a “C” in 2025, reflecting vulnerabilities exposed by winter storms like Uri in 2021, which caused widespread blackouts. Cannabis taxes could finance grid upgrades, renewable integration, and weatherization efforts through the Electric Reliability Council of Texas (ERCOT). By earmarking funds for transmission lines and backup systems, Texas could prevent future outages, supporting its energy-dominant economy.
Education Facilities: School Buildings and Employee Vetting
Schools infrastructure, graded “C,” struggles with overcrowding and outdated facilities amid population growth. Following Colorado’s model, revenue could bolster school construction funds, ensuring safe, modern learning environments. Furthermore, in light of rampant issues with sexual assault allegations in Texas schools—such as a recent report revealing 6,888 instances of physical and sexual offenses by school employees against students—this revenue could be directed toward implementing more extensive background checks and vetting processes for school employees. The Texas Education Agency has also documented 2,537 reports of sexual abuse involving students and inappropriate relationships, emphasizing the need for enhanced safeguards like expanded criminal history reviews and the “Do Not Hire” registry to prevent misconduct and protect students. Recent legislative efforts, including bills to abolish school immunity in sex abuse cases and strengthen reporting requirements, could be further supported by dedicated funding from cannabis taxes, addressing these vulnerabilities without straining existing budgets.
Public Safety Infrastructure
Cannabis funds could enhance fire stations, police facilities, and hazardous waste management, which improved to a “B” but still requires investment amid industrial growth. Allocating revenue to modernize public safety facilities would ensure Texas communities are better equipped to handle emergencies and maintain order.
A Path Forward for Texas
As Texas navigates its 2025 legislative landscape, with ongoing debates over cannabis policy—including Gov. Abbott’s reported interest in recreational legalization—the potential for infrastructure funding cannot be overlooked. By legalizing and taxing recreational cannabis responsibly, the state could generate sustainable revenue to elevate its infrastructure from mediocre to exemplary, fostering economic vitality and quality of life for its residents. While challenges like market competition exist, the successes in other states offer a blueprint for Texas to build a stronger future.
I get the argument; however, I don’t like the “financial” reasoning. It’s the same as for the Lottery (“education” - ha!) and full bore gambling. Going forward, will there be ANYTHING that is not for sale?