The economic impact of cannabis

September 24, 2021

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Research and economic data accumulated over the past few years shows that the cannabis industry is making a positive impact on the economy in states and communities by creating more jobs, increasing property value, and generating tax revenue that is used for a variety of purposes.

Employment benefits from the cannabis industry

Jobs will be created with the opening of grow facilities, manufacturing facilities, pharmacies and retail stores to support the legal cannabis industry. In addition to jobs directly related to the marijuana supply chain, hundreds of part-time jobs are required to keep the industry going. This includes accountants, lawyers and many more.

It is estimated that the legal cannabis industry in the 37 states of the United States employed 321,000 full-time employees with operational medical and / or cannabis programs as of January 2021. Of these full-time positions, 24% (77,000) came during 2020 showing a significant growth trend as more states start and expand cannabis programs.

If you add the estimated eight to ten side businesses that are believed to support any licensed cannabis company, employment levels skyrocket. Based on this data and projections for the future, it is clear that regulated cannabis markets benefit states’ economies by creating thousands or tens of thousands of new jobs.

Real estate benefits from the cannabis industry

States that have legalized medicinal and / or recreational cannabis are seeing significant increases in real estate values and lease rates for licensed growers, manufacturers, pharmacies, and retailers to operate.

Due to strict zoning laws in many areas, marijuana companies have limited choices of real estate to build their facilities. Property owners understand this and bear their own risks when renting out to cannabis-related businesses. As a result, rental rates and property values are skyrocketing.

It’s not just commercial real estate and land values that are benefiting from the marijuana industry. A study of communities in Colorado published in January 2018 found that legalization of cannabis has increased residential value by 6%.

Tax benefits of the cannabis industry

One of the easiest ways to track the economic benefits of the legal cannabis industry for states and local communities is through tax revenue, especially in states that have legalized both recreational and medicinal cannabis, as taxes on adult use are typically much higher are as the medical taxes. In fact, some states don’t tax medical cannabis at all, but it’s not uncommon for adult cannabis to be taxed multiple times (consumption tax, state sales tax, and local tax) and at rates of up to 15%, 17%, or even 37%.

How much do all these taxes bring in the states? According to the Motley Fool, California raised $ 1,031,879,926 in tax revenue in 2020 – most of any state. Washington state tax revenue was $ 469,200,000 in 2020, and Colorado tax revenue was $ 387,480,110 in 2020.

Taxes levied by states and municipalities are used for a variety of purposes – from funding community programs, education, and law enforcement, to paying the costs of running the state or city’s cannabis program.

The cannabis industry has a positive economic impact

When a state allows medicinal and / or recreational cannabis to be sold, its economy benefits. This is the conclusion reached by numerous researchers who have analyzed a number of economic factors over the past few years. In particular, employment rates, property value and tax revenues all increase with the approval of cannabis for medicinal purposes and for adults.

MJBizDaily published economic data in its annual Cannabis Business Factbook 2021 that relativizes the economic impact of a legal cannabis market. Consider these facts:

The total economic impact of US cannabis sales in 2021 is projected to reach $ 92 billion (an increase of more than 30% from 2020).
The total economic impact of US cannabis sales will soar to over $ 160 billion in 2025.
For every US dollar consumers and patients spend in retail stores, an additional US $ 2.50 will flow into the economy – much of it at the local level.
California’s legal cannabis industry is expected to add nearly $ 20 billion to the state’s economy in 2021.
The legal cannabis markets in Colorado, Illinois, Oregon, and Washington will each add more than $ 10 billion to their local economies in the coming years.
Nevada’s economic impact per person from the legal cannabis industry will be around $ 1,917 in 2021.
The legal cannabis markets in Alaska, Colorado, and Oregon will each bring about $ 1,500 per person to their economies this year.
California will have an estimated economic impact of $ 500 per person in 2021.

Bottom line, the data shows that the cannabis industry is having a positive economic impact on states and communities, and that impact has not yet peaked.

Originally published on 11/13/18. Updated 9/24/21.