Marijuana Is Now a Driving Engine of the American Economy
The legalization of cannabis for medical and recreational purposes is having a positive impact on states’ economies in ways that go well beyond tax revenue. From job creation to increased tourism, marijuana legalization is driving economic markets. Here’s how.
Nine Nevada, where retail sales became legal on July 1, retailers reported over 40,000 transactions in just the first weekend and $3.5 million in taxes in the first month. In Alaska, legal cannabis sales have generated $1.2 million in tax revenue over the first eight months.
In Washington and Colorado, tax revenues from the legal cannabis market are well above initial projections. In Washington, tax revenue totaled $220 million for the 12-month period ending June 30, 2016. In Oregon, marijuana-related tax revenues are yielding about $4 million per month – about twice what regulators initially predicted.
In Nevada, where retail sales became legal on July 1, retailers reported over 40,000 transactions in just the first weekend. In Alaska, legal cannabis sales have generated $1.2 million in tax revenue over the first eight months.
The legal cannabis industry is responsible for the creation of nearly 150,000 new full-time jobs, according to data compiled by the online content provider Leafly.com. Their September 12 analysis identified 149,304 jobs in the marijuana sector – a 22 percent increase over the number of jobs that existed one year ago. States reporting the largest number of cannabis-related jobs were California (47,711) Colorado (26,891), and Washington (26,556).
The state of Colorado has experienced an unprecedented increase in tourism following the passage of marijuana legalization. According to data released last year by the Colorado Tourism Office, a record-setting 77.7 million people visited the state in 2015, spending over $19 billion. It is the fifth year in a row that tourism has set records in the state, which is experiencing a rapid growth in toursm that is nearly double the national average. And while not all of Colorado’s visitors are coming there for legal weed, many of them are. Among vacationers surveyed by the state’s Tourism Office in 2016, 49 percent responded that marijuana’s legal status positively influenced their decision to visit the state, and 22 percent of Colorado vacationers said that marijuana’s legal status was “extremely influential” in shaping their decision.
WORKPLACE PARTICIPATION AND WAGES
Lifting cannabis criminalization is linked with greater participation in the workforce and an increase in weekly income. A 2016 University of California at Irvine study reported that ending marijuana possession arrests is associated with an increased probability of employment, particularly among young African American males, and an average increase of 4.5 percent in weekly earnings. According to separate data published last year in the journal Health Economics, medical cannabis regulatory laws are associated with fewer workplace absences. Data published by the National Bureau of Economic research similarly reports that medicalization is associated with a"9.4 percent increase in the probability of employment and a 4.6 percent to 4.9 percent increase in hours worked per week” among those over 50 years of age. “Medical marijuana law implementation leads to increases in labor supply among older adult men and women,” researchers concluded.
The growth in the number of cannabis retail facilities is associated with an increase in nearby home values. That’s according to a just published economic analysis by researchers at the University of Georgia at Athens, the University of Wisconsin – Madison, and California State University Sacramento. They reported that single family residences within 0.1 miles of a retail marijuana establishment saw an increase in value of approximately 8.4 percent compared to those located slightly further – between 0.1 miles and 0.25 miles – from the site. That increase in property value was estimated to be almost $27,000 for an average house in the area.
"In addition to sales and business taxes generated by the retail marijuana industry, the associated increase in property tax revenues represents another potentially appealing selling point for legalization,” they concluded. Their findings are similar to those of a University of Mississippi paper, published earlier this year, which determined, “[L]egalizing retail marijuana leads to an average 6 percent housing value appreciation.”
Legal marijuana is associated with reductions in criminal activities. According to a 2017 study published by the IZA Institute of Labor, “the legalization of recreational cannabis enacted in Washington caused a decrease in crime rates” – a result that authors speculated was due to reduced alcohol consumption by the general public. In Denver, incidences of violent crime and property crime fell 10.6 percent in the months immediately following legalization compared to that same span one year earlier. A 2014 assessment of state-by-state crime data similarly reported that jurisdictions experienced a drop in violent crime following medical marijuana legalization. Researchers also report that marijuana retailers play a role in reducing crime within their immediate vicinity. According to a 2017 paper published in the Journal of Urban Economics, “an open dispensary provides over $30,000 per year in social benefit in terms of larcenies prevented.”