What Are the Side Effects of Marijuana on the Economy?
The side effects of marijuana on the economy are hitting new highs, and are expected to keep growing for years. Thanks to stronger public support and new legalization laws, the billion-dollar cannabis market is soon set to quadruple.
Everybody knew there were wheelbarrows of money to be made from states legalizing cannabis, but the amounts continue to impress. National legal sales, which include medical sales and adult-use sales, grew from $4.6 billion in 2014 to $5.7 billion in 2015, according to a recent report from New Frontier and Arcview. The increase is a result of explosive growth in adult-use market sales, which surged 232% from $373.8 million to $1.2 billion as legalized recreational marijuana gained popularity. By 2020, national legal sales are expected to surpass $22 billion, with adult-use sales accounting for over half of that haul.
“The strong growth in demand for legal cannabis over the past two years is expected to continue in the years ahead,” explains the report. “Twenty-three states already permit medical cannabis use and four states and the District of Columbia allow full adult use. With nearly a dozen states debating changes to their cannabis laws in the coming year, 2016 will be the tipping point in which a majority of U.S. states transition from cannabis prohibition to some form of regulated legal markets. Key states, including California, Nevada and Massachusetts, are expected to legalize adult use, while Florida is expected to pass a medical cannabis bill similar to the one that narrowly failed in 2014.”
Legalizing marijuana is only the beginning. This flourishing industry creates a trickle-down effect. More relaxed laws fuel additional sales and tax revenue, which in turn results in more jobs and new business opportunities. Oregon’s first month of legal recreational marijuana produced $3.5 million worth of tax revenue. Washington’s first year of legal sales generated $70 million in tax revenues. Colorado bagged $135 million in 2015 from cannabis taxes and fees. It’s raining money out West.
The jobs market also stands to benefit from a legal cannabis market. At least 16 different job occupations are being created, and everyone from edible creators and budtenders to glass merchants and couriers are setting up shop to profit from the country’s green rush. In fact, Marijuana Business Daily estimates for every $1 spent on retail marijuana, the economic benefit realized amounts to an additional $3. Using New Frontier and Arcview’s $22 billion sales estimate, the total economic impact is likely to exceed $100 billion in the near future.
One line of business not expected to participate heavily in the cannabis market anytime soon is banking. Since marijuana is still classified as a Schedule 1 substance, the most restrictive of classes by America’s Drug Enforcement Administration, financial institutions are prohibited from taking marijuana money. Some marijuana-related businesses may be able to obtain limited bank accounts or electronic transferring services from companies like PayQwick, but cash still reigns king until federal law sobers up to reality.
What is reality these days? The majority no longer believe we should “just say no” to marijuana. A 2015 Gallup survey finds 58% of Americans believe marijuana should be made legal, tied for the highest support level in Gallup’s 46 years of polling. The majority of Americans have supported legalizing marijuana since 2013, while an average 48% supported the movement from 2010-2012. Support was only at 12% when Gallup first asked the question in 1969.
Support is even being seen on a federal level. The Centers for Disease Control recently told physicians across the country to stop testing their patients for marijuana. The federal agency made the change to help patients who are typically required to test free of illegal substances (including THC) in order to continue a pain treatment plan, such as patients going from a family doctor to a pain management clinic. Meanwhile, the Supreme Court threw out a lawsuit Oklahoma and Nebraska filed against Colorado, which basically claimed the state was undermining federal law and hurting neighboring states. In the near future, the DEA is expected to reconsider marijuana’s Schedule 1 status.
The stigma of marijuana is slowly fading, and local economies are seeing green.