Since legal marijuana first began selling in Washington as of July 8, $1 million in related taxes have been collected. This number could easily increase over the next several months as more growers and retailers are granted their licenses.

The tax rate on marijuana is high in Washington — 25% is collected at each stage. Going from a producer to processor to retail to consumer can potentially add three stages of taxing. Because demand is so high and competition is so low — with only one other state, Colorado, currently allowing the sale of legal marijuana — the tax rate is doable.

Right now, much of Washington’s industry is held back simply by the lack of licenses. Many growers’ first crop has already sold out, which has helped keep prices above black-market rates. With time, the price will likely fall down to $20 per gram. Around the state, hundreds of businesses are still waiting for approval before opening their doors.

Colorado is expected to reel in eneral/2014/07/30/national-marijuana-legalization-how-much-tax-reven.aspx”>$30.6 million in marijuana-related taxes just this year. Additionally, because the states are the only two legal options so far, they benefit from increased levels of tourism, which means more revenue for residents, and more taxes for the state generated from restaurant visits, hotel stays, and more. Once Washington gets the ball rolling, it is expected to make $63 million annually in marijuana taxing.

So far, the greatest competition for these states is not each other, but the black market, which still offers lower prices in most areas. Studies have shown that 90% of buyers know when a cheaper competitor exists, and weigh that as part of their decision. However, many residents and visitors are eager to try a guaranteed legal product, and are willing to pay the difference in order to do so.

Oregon and Alaska are both voting on legalization later this year, and an estimated 54% of Americans overall now approve legalization. It is likely that several states will legalize marijuana within the next 10 years, but for now, Washington and Colorado reap the benefits of being the only real options.