Hoosiers Spend an Estimated $1.8 Billion a Year on Cannabis
For Release
Wednesday
April 29, 2026
New RAND Studies Examine Cannabis Landscape and Policy Options for Indiana
Indiana residents spend an estimated $1.8 billion per year on cannabis, despite the state maintaining some of the strictest cannabis laws in the country, according to new RAND research that maps Indiana's cannabis landscape and policies.
The research, comprising two studies—Indiana's Cannabis Landscape and Considering the Consequences of Changing Cannabis Policy in Indiana—examines cannabis use, spending, enforcement and policy options in one of the few states where cannabis remains fully illegal, even for medical purposes.
“The policy landscape around cannabis in Indiana is complex and dynamic,” said Beau Kilmer, lead author of both reports and codirector of the RAND Drug Policy Research Center. “While cannabis remains illegal, intoxicating hemp products with delta-9 THC or delta-8 THC are widely available, and Indiana residents have relatively easy access to legal cannabis in three neighboring states. This creates challenges for projecting the consequences of changing cannabis supply laws in the state.”
More than 40% of Indiana residents live within 50 miles of a licensed cannabis dispensary in either Illinois, Michigan or Ohio, and nearly all reside within a 100-mile drive, according to the landscape study.
The first study also finds that approximately 1.3 million Indiana residents ages 12 and older reported using cannabis in the past year, with nearly one-third reporting daily or near-daily use. These frequent users account for most spending on cannabis in Indiana each year. The best estimate of annual spending is $1.8 billion, but the researchers noted some uncertainty and spending likely ranges from $1.2 billion to $2.6 billion.
While adult cannabis use in Indiana has risen steadily, the Indiana Youth Survey found that past-month use among high school seniors dropped by nearly half from 2016 to 2024.
On the enforcement side, Indiana recorded more than 13,000 cannabis-related arrests in 2024, and the per capita arrest rate for Black residents was nearly four times higher than that for White residents, according to the study.
The second study examines what could happen if Indiana changes its approach to cannabis. Researchers outline a range of policy options, ranging from reducing penalties for cannabis possession to regulating and licensing supply and sales to adults.
Under one scenario, the state could generate annual tax revenue of approximately $180 million five years after legalization. But under different assumptions about tax rates and other factors, that figure could range from $100 million to $270 million annually. At the same time, legalization would likely reduce, though not eliminate, the estimated $10 to $20 million the state currently spends on cannabis-related criminal justice costs.
The study does not make policy recommendations for Indiana, but notes that the state is not limited to the for-profit approach to legalization implemented in other states. For example, the state could sell cannabis through government stores, as some states do with liquor. And compared to other states, Indiana could choose to spend more on regulation, testing, and enforcement if it prioritizes product safety and reducing the size of the illegal market.
The report also includes a comprehensive review of the evidence on adult-use cannabis legalization. However, the authors note that uncertainty exists about the extent to which the existing evidence would apply to Indiana. “Almost all the existing research is based on states that allowed medical cannabis before legalizing adult use, an important difference in the case of Indiana”, said Rosanna Smart, a coauthor on both reports and codirector of the RAND Drug Policy Research Center. “Further, most studies do not account for the proliferation of intoxicating hemp products, which may affect the inferences made in these studies.”
If Indiana decides to change its approach, the researchers note that the state could follow a gradual path that builds in flexibility. For example, the state could initially limit the types of products or THC levels allowed. It could also incorporate a sunset provision, giving lawmakers an opportunity to revisit the policy if outcomes fall short of expectations.
Support for this research was provided by the Richard M. Fairbanks Foundation. Other authors include Gregory Midgette, Jonathan P. Caulkins, Roland Neil, Ben Senator, Wendy Hawkins, Anna Newell and Ellie Wadsworth.
The RAND Drug Policy Research Center conducts research and analysis to help decisionmakers in the United States and throughout the world address issues involving alcohol, cannabis, and other drugs.
