Because of the controversial Presidential election of 2016, many people missed the fact that several other crucial decisions occurred at the polls too: Most importantly, several states held referendums to decide the fate of the cannabis industry in their areas. Modeling the likes of other legal states, such as Washington and Colorado, four states opted to legalize recreational pot, being Maine, Massachusetts, Nevada, and California.
Other states voted on medical marijuana, with North Dakota, Arkansas, and Florida opting to allow it. At the time, Arizona chose not to. Now, however, almost like dominos, more and more states are legalizing cannabis, whether for recreational or medical use, even both. Already, the economic impact has been enormous, with new laws spawning a flourishing assortment of weed companies.
A Burgeoning Marijuana Industry
These companies include cultivators, manufacturers, distributors, consultants, scientists, chefs, and many others. To date, more than half of the United States allows medical weed, with more and more legalizing small quantities for recreational pot too. According to the National Institutes of Health, the economic benefits of this decision have long been obvious, prompting other states to join the fray.
In both the short- and long-term, legalizing cannabis would prove notably advantageous for local economies, generating obscene amounts of money for both state and federal coffers. It could jumpstart prospects for entire communities, securing a horde of opportunities at the local level. At the state level, here are just a few ways cannabis can benefit the economy:
Generation of Tax Revenues
Over the last decade, weed sales in both Colorado and Washington exceeded everyone’s already high expectations, resulting in significant tax revenues. According to Forbes, Colorado alone generated over $135 million in fees and taxes associated with medical and recreational sales of cannabis, totaling more than $996 million just in 2015.
In North America, sales grew a whopping 30 percent in 2016 to $6.7 billion. They will likely reach $20.1 billion by 2021, according to estimates by ArcView Market Research. Local statistics favor this view too, with a Colorado State University – Pueblo’s Institute of Cannabis Research report finding recently that a legal industry is adding well over $58 million to the local economy, mainly from taxes and related fees.
If the government were to legalize marijuana federally, the economic impact nationwide could be extraordinary. A recent report from New Frontier, a cannabis analytics firm, indicates that pot legal at the federal level could accrue an extra $131.8 billion by 2025 in aggregate federal tax revenue. For many states, this financial promise proves the deciding factor in going ahead with legalization.
California, a state much bigger in both population and size than Colorado, could well surpass $15 billion in sales revenues, which is at least $3 billion in taxes. This is according to a study by ICF International in April 2016. In Massachusetts, a special senate committee put tax revenues for the state at between $50 million and $60 million.
Creation of Jobs
Although it costs money to set up dispensaries and cannabis nurseries, it is the first step in getting a robust industry going that will create thousands of new jobs in each state. Not only jobs, but other income opportunities too, leading to diverse economic activities. In states like Nevada and California, with infrastructure already in place, the economic impact becomes more quantifiable as the market grows.
A Nevada-specific study by a RCG Economics and Marijuana Policy Group claims that legalizing pot recreationally throughout the state could generate more than $1.7 billion in labor income by 2024, easily supporting more than 41,000 newly created jobs. According to the ICF study, legal sales could create another 81,000 direct, indirect, and induced jobs in California, with a labor income of $3.5 billion.
The report by New Frontier predicting the national impact of federally legal weed suggests that legalizing could add at least 1.1 million new jobs nationwide by 2025. They would quickly fill an industry growing faster than any other in history has. It would require workers to farm, process, distribute, and sell cannabis-related products. That is not all, however.
Opportunities for secondary industries to emerge, related to legal marijuana if not directly, would be simply abundant. There will be a need for scientists, laboratory testers, software developers, construction companies, interior decorators, financing services, restaurateurs, among many others. The employment potential is simply enormous.
Opportunities to Invest
Legal cannabis offers both local and national economies an array of lucrative investment benefits. Legalization could also aid in securing investment portfolios of domestic and international investors, all looking for a profitable endeavor. While the federal government keeps cannabis illegal, investors have much difficulty capitalizing on industry growth, creating unwarranted economic obstacles.
Currently, few cannabis-related companies are trading on public stock exchanges, and although investors can work with exchanges over-the-counter, most successful businesses from the fledgling phase of the industry base themselves in Canada or other weed-friendlier countries. If the federal government would legalize nationally, these companies would have fewer restrictions.
If weed were to be legal federally, cannabis businesses would have the freedom to list their stocks on all U.S. exchanges. This would improve liquidity and make the industry more accessible to other investors. If growth rates continue in the industry as they have been in recent years, there will be no stopping keen investors from all over the world.
Money to Save
Legal weed can kick-start the economy in a myriad of ways. With more income available and more jobs, people and governments will have a chance to save, along with all the revenue that such processes can generate. Right now, the federal government spends several billion dollars every year just on enforcing outdated marijuana laws. The American Civil Liberties Union found these costs to be $3.6 billion in 2013.
As legalization spreads, enforcement costs will go down, but if weed were legal nationally, they would not exist at all. If marijuana exited the list of federally controlled substances, there would be far fewer court cases involving weed-related offenses, ultimately reducing incarceration rates considerably and creating an opportunity to save vast sums of money.
Legal pot will also benefit medical patients significantly, as prices will drop exorbitantly as more states legalize. This will be because of commoditization, which may or may not appeal to tax collectors and profit-hungry companies. Prices will be much lower. Additionally, with consumers having more money to spend, legalization could increase revenues in other sectors too.
Federal legalization remains controversial, with much pushback against the notion of making it legal nationwide. Critics argue the potential for confusing law enforcement officers struggling to keep up with changing regulations, worries about increased use among the youth and homelessness, a possibility of decreasing property values, and other valid issues.
Some opponents do not want any changes to marijuana or its regulatory status to occur simply to avoid upsetting the status quo, but public opinion is shifting. If current trends continue, the federal government will have no choice but to legalize, which some experts say could happen within three years. With states legalizing on their own, federal cannabis laws run the risk of becoming obsolete.