By Spy Uganda
Kampala: Although some poor African governments have not yet followed the trend of marijuana legalization seen in Europe and the Americas and most parts of Africa, legitimate marijuana production for medicinal and industrial use is taking off the globe as the craziest most lucrative business.
All told, more and more countries are moving to legalize marijuana and the impact has already been tremendous. To understand how lucrative the business is, even countries which are economically stable have legalized medical cannabis including more than half of U.S. states with fifteen states legalizing certain quantities of marijuana.
The economic benefits of legalizing weed have already been apparent as the first states have moved to change their economic positions. Overall, legal marijuana could mean a big push for state economies.
In our previous articles, we have elaborated the impact of Cannabis on African economic staggering countries, now we are looking at the US as one of the countries with the strong economy but could not miss keeping it on top with medical cannabis profits. Below, we’ll explore some of the key economic benefits of legal marijuana.
Impact On Tax Revenue
Better than expected sales of marijuana in Colorado and Washington over the past several years have resulted in buoyant tax revenues. In 2019, Colorado collected more than $302 million in taxes and fees on medical and recreational marijuana. Sales in the state totalled over $1.7 billion.5 6 Sales in the U.S were $12.2 billion in 2019 and projected to increase to $31.1 billion by 2024.
Local research supports this view as well; a report from the Colorado State University-Pueblo’s Institute of Cannabis Research recently found that the legal cannabis industry has contributed more than $80.8 million to the local economy in 2017, primarily through taxes and other fees. Should marijuana become legal on a federal level, the benefits to the economy could be exceptional: A report from cannabis analytics company New Frontier suggests that federally legal pot could generate an additional $105.6 billion in aggregate federal tax revenue by 2025.
In December 2019, it was reported that since January 2018, California’s cannabis sales had generated 411.3 million in excise tax, $98.9 million in cultivation tax, and $335.1 million in sales tax.10 The Massachusetts Cannabis Control Commission reported in November 2019 that in the first year of opening marijuana retailers, $393.7 million was generated in gross sales.11
Income And Jobs
Setting up marijuana nurseries and dispensaries would be the first step for the states that voted in favour of medical marijuana. These would not only create jobs but also set the ball rolling for economic activity in the pot industry in these areas. In the case of states like California and Nevada where such infrastructure already exists, the economic impact has become more quantifiable as the sector has matured.
An RCG Economics and Marijuana Policy Group study on Nevada says that legalizing recreational marijuana in the state could support over 41,000 jobs till 2024 and generate over $1.7 billion in labour income, however, the ICF study estimates at least 81,000 additional direct, indirect, and induced jobs in California as a result of legalized marijuana sales. It also projects an increase in total labour income by at least $3.5 billion.
New Frontier’s report predicting the impact of federally legal marijuana suggests that nationwide legalization could generate 1 million jobs by 2025. These jobs would likely come from the quickly growing industry which would spring up across the nation. Workers would be needed to farm, process, distribute, and sell marijuana-based products.
Further, there would be ample opportunities for secondary industries that are related to legal cannabis although not directly involved in its production and distribution. These might include software developers, financing services, construction companies, and many others.
Legal marijuana presents the possibility of tremendous benefits to economies on a local and a national scale. It also could help to secure the investment portfolios of investors across the country and further afield as well.
Should marijuana become legal on the national level, marijuana companies would be free to list their stocks on all U.S. exchanges, thereby enhancing liquidity and opening up access to many more investors. Should the growth rates for the cannabis space continue as they have in recent years, it’s likely that investors would express a keen interest in the industry.
When considering the economic benefits of legal marijuana, it’s important to think of the money that might be saved as well as revenue that could be generated through such a process. Currently, federal marijuana enforcement costs several billion dollars per year in the US. A 2013 report by the American Civil Liberties Union found that the costs at that time were approximately $3.6 billion per year.
Meanwhile, we have since established that the market for legal marijuana is set to be worth around US$146 billion (£114 billion) a year by 2025, with medicinal marijuana set to make up more than two-thirds of that, according to consultants Grand View Research.