The Economic Benefits Of Legalized Cannabis
August 6, 2021
How Legalizing Marijuana Can Help The Economy
The economic benefits of cannabis include increased tax revenues, job growth, and investment opportunities, but that’s just the beginning. To learn how legalizing marijuana can help the economy, we must look first to history, and then to the economic impact of marijuana legalization results for states with legal cannabis.
In 1919, the 18th Amendment established Prohibition as the law of the land. Making alcohol illegal didn’t make people any less likely to drink. Instead, tens of thousands died due to drinking unregulated or counterfeit products. Prohibition also led to huge increases in organized crime, corruption, and violence. In 1933, the 21st Amendment was ratified, repealing the 18th Amendment, and the nation began to recover from The Great Depression.
Socioeconomic Impact Of Marijuana Legalization
“Marijuana prohibition entails direct enforcement costs — including police, prosecutorial, judicial, and correctional resources — and prevents the taxation of marijuana production and sale.”
– The Marijuana Policy Project
According to the Drug Policy Alliance:
- Drug offenses are the leading cause of arrest in the United States
- In 2019, there were 545,600 arrests for marijuana possession
- Black people are 26% of those arrested but represent just 13.4% of the U.S. population
- Black and white people use and sell drugs at similar rates
- One in five prisoners is incarcerated for drug offenses
- $3.5 billion in taxpayer funds are allocated in 2021 to fund the Drug Enforcement Agency
Economic Benefits Of Marijuana
“68% of Americans favor the legalization of marijuana” – Gallup Poll 2020
- 2020: The cannabis industry adds more than 77,000 jobs
- 2021: The cannabis industry supports 321,000 full-time jobs across 37 states
- 2021 Leafly Jobs Report
In 2020, the pandemic spurred record sales of cannabis nationwide as the industry was deemed essential. Legal marijuana sales nearly doubled 2019 figures, for an estimated $17.5 billion nationwide. There were also billions in unregulated and untaxed illegal sales. Recapturing lost revenue is just the beginning of how legalizing marijuana can help the economy. Legalization:
- Eases the burden on law enforcement and prisons
- Ends disproportionate punishment
- Improves job opportunities for all, especially minorities and women
- Allows new cannabis-based medical treatments to be researched and developed
The economic benefits of cannabis in states with some form of legal cannabis are evident in the numbers. In 2021, the U.S. cannabis industry currently supports 331,00 full-time equivalent jobs.
The economic impact of marijuana legalization is reflected in growing state tax revenues generated through legal sales. Cannabis taxes are used to fund community investment in:
- Schools and education programs
- Veterans programs
- Mental health, alcohol and drug treatment programs
- Marijuana arrest/conviction record expungement
- Job training and other social services
Economic Benefits Of Marijuana: Wealth Building
Increased tax revenues, job growth, and investment opportunities all are powerful incentives to push for marijuana legalization. Social equity licensing programs support reinvestment bringing new BIPOC and women-owned businesses, and jobs to the populations and communities disproportionately impacted by marijuana criminalization.
According to a new study conducted by Clever Real Estate, Marijuana legalization increases property values. from 2017 to 2019, “home values increased $6,338 more in states where marijuana is legal in some form, compared to states that haven’t legalized marijuana.” Every $1 million in tax revenue adds $470 in property values.
Economic Impact Of Marijuana Legalization: Colorado
Colorado collects 2.9% sales tax from both medical and recreational marijuana sales along with an extra 15% excise tax on retail marijuana.
- Total legal marijuana sales 2019: $1.7 billion/$302 million tax revenue
- Total legal marijuana sales 2020: $2+ billion/$387.4 million tax revenue
- Industry sales are projected to increase to $31.1 billion by 2024
*Arcview Market Research and BDS Analytics.
Economic Impact Of Marijuana Legalization: Arizona
In January 2021, recreational sales launched. Arizona collects 5.6% sales tax from both medical and recreational cannabis sales. Additional city and county taxes range from 0.25 to 4 percent. Recreational cannabis generates an extra 16% excise tax on retail products.
Total Arizona Marijuana Sales
Arizona is outpacing Colorado’s launch of recreational sales in 2014, which generated $684 billion in total sales. Increased tax revenue will be just the beginning of the economic benefits of marijuana and its positive effects on the economy.
- 2019: $760 million/$28 million tax revenue
- 2020: 106 tons of marijuana flower, edibles, vapes, and other products—+27% YOY
2021: Estimated $1 billion in 2021/$150 million tax revenue
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