Marijuana Legalization’s Impact on the Economy

Four states (California, Maine, Massachusetts, Nevada) voted to make recreational marijuana legal, putting 20% of the American population within those areas. Depending on the law, medical or recreational marijuana can be used in Alaska, Colorado, Oregon, Washington state, and Washington, D.C.

marijuana and the economy

What is marijuana legalization’s impact on the economy?

Tax Revenue

A deeply tempting bone for various states is the revenue that legal marijuana brings in. Colorado alone, in 2015, saw a lump tax increase of 135 million dollars. Sales in Colorado added up to 996 million dollars, and all of North America saw a sale growth of 30% in 2016 as the marijuana market began to rise.

California could hit 3 billion dollars in tax revenue alone, not to mention the other gains it would have from a projected 15 billion dollar industry. From the sales alone, it would gain another 60 million dollars. This does not include the sunk costs and capital that would increase the revenue from business infrastructure.

Jobs and Business Growth

The Marijuana Policy Group (MPG) found that in Colorado, marijuana production has a stronger effect on the economy than 90% of the other industries. Overall, 18,005 full-time jobs were created, with 2.4 billion dollars added to the overall economy. Every dollar has over 100% gain in economic activity, beating every industry. It is second only to federal spending.

With legalization and job creation comes the rise of marijuana dispensaries and online headshops. In Oregon alone, there are more marijuana dispensaries than either McDonald’s or Starbucks. The rise of online headshops is so quick that the next websites to gain popularity teach which headshops to frequent–one of the top rated being Head Shop Headquarters.

International Trade

This is where the federal government may hit a snag, if it considers making marijuana legal throughout the entire nation. The current Controlled Substances Act, which has marijuana on its list of prohibited drugs, complies with the 1961 Single Convention on Narcotic Drugs, the 1971 Convention on Psychotropic Substances, and the 1988 Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.

The United States has been a strong advocate for suppressing drugs considered harmful. If the US decides to move on its own (unilaterally) to legalize marijuana, it sets a precedent for other nations to relax their own drug laws. On one hand, if the respective nations are willing, it could turn marijuana into an international trade item. On the other hand, it would need to spend more on marijuana quality, and consider what the import money might fund.

Marijuana Legalization’s Impact on the Economy: Locally Positive, Globally Unsure

Marijuana is a relatively new industry, and one that has to be properly built up and regulated. However, the jobs it creates and the economic growth it adds will remain past the costs. The overall American economy would be expanded. At the same time, legalization may cause the US to lose some credibility in the international narcotics game. Marijuana would be on the trade table, and there is no projection yet as to what the impact might be.

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