When a state allows the sale of medical and/or recreational marijuana, its economy benefits. That’s the conclusion numerous researchers have made after analyzing a number of economic factors over the past several years. Specifically, employment rates, real estate values, and tax revenue all increase with the approval of medical and adult-use marijuana.
Employment Benefits from the Marijuana Industry
With the opening of cultivation and manufacturing facilities, dispensaries, and retail stores to support the marijuana industry, jobs are created. In addition to jobs that are directly involved with the marijuana supply chain, there are hundreds of ancillary jobs needed to keep the industry going. These include accountants, lawyers, and many more.
It is estimated that the cannabis industry employed 165,000 to 230,000 full and part-time workers across the United States in 2017, and Arcview Market Research predicts that number will jump to over 400,000 by 2021. According to a report from Drug Policy Alliance, the number of direct jobs generated from the marijuana industry in Colorado, Oregon, and Washington exceeds 10,000 and ancillary jobs add another 10,000 or more per state.
Based on this data and future predictions, it’s clear that regulated marijuana markets benefit states’ economies by creating thousands or tens of thousands of new jobs.
Real Estate Benefits from the Marijuana Industry
States that have legalized medical and/or recreational marijuana are seeing a significant increase in property values and lease rates where marijuana cultivators, manufacturers, dispensaries, and retailers can operate. Due to strict zoning laws in many areas, marijuana businesses have a limited supply of properties to choose from to build their facilities. Property owners understand this and face their own risks when they rent to marijuana-related businesses. Therefore, lease rates and property values skyrocket.
For example, in Denver Colorado, the average lease rates for marijuana cultivation facilities increased to two to three times the average warehouse lease rates between 2014 and 2016 according to data from CBRE Research.
It’s not just commercial property and land values that benefit from the marijuana industry. A study of Colorado municipalities published in January 2018 found that housing values increase by 6% with marijuana legalization.
Tax Benefits from the Marijuana Industry
One of the easiest ways to track the economic benefit of the marijuana industry to states and local municipalities is through tax revenue, particularly in states that have legalized both recreational and medical marijuana since adult-use marijuana taxes are typically much higher than medical marijuana taxes. In fact, some states don’t tax medical marijuana at all, but it’s not unusual for recreational marijuana to be taxed multiple times (excise tax, state sales tax, and local tax) and at rates as high as 15%, 17%, or even 37%.
Taxes collected by states and local municipalities are used for a variety of purposes – from funding community programs, education, and law enforcement to paying for the costs to run the state or town’s marijuana program.
As an example, the state of Colorado collected more than $247 million in taxes from the marijuana industry in 2017. Each year, the state’s tax revenue from marijuana sales has increased. Among other states that have legalized recreational marijuana, tax revenues are also sizeable. According to the Drug Policy Alliance report, in 2017, the state of Washington collected nearly $100 million in taxes while Oregon collected nearly $20 million. During the same year, Nevada collected over $13 million in taxes and Alaska collected over $1 million.
The Marijuana Industry Provides a Net Positive Economic Benefit
The data shows that the marijuana industry positively affects states and municipalities by creating more jobs, increasing real estate values, and generating tax revenue that is used for a wide variety of purposes. However, there are costs associated with marijuana programs. Do the economic benefits outweigh the costs?
Researchers at Colorado State University – Pueblo’s Institute of Cannabis Research set out to answer that question when they studied the economic benefit of marijuana to Pueblo County, Colorado. The researchers found that the marijuana industry provides a net positive economic benefit to the county, reports the Denver Post.
In total, the marijuana industry generated a $58 million economic impact to Pueblo County in 2016, but it also added $23 million in costs. Therefore, the resulting positive net impact was $35 million. The researchers estimate that the net impact to Pueblo County will increase to nearly $100 million by 2021.
Bottom-line, the data shows that the marijuana industry has a positive economic impact on states and communities even after accounting for related costs.
Susan Gunelius, Lead Analyst for Cannabiz Media and author of Marijuana Licensing Reference Guide: 2017 Edition, is also President & CEO of KeySplash Creative, Inc., a marketing communications company offering, copywriting, content marketing, email marketing, social media marketing, and strategic branding services. She spent the first half of her 25-year career directing marketing programs for AT&T and HSBC. Today, her clients include household brands like Citigroup, Cox Communications, Intuit, and more as well as small businesses around the world. Susan has written 11 marketing-related books, including the highly popular Content Marketing for Dummies, 30-Minute Social Media Marketing, Kick-ass Copywriting in 10 Easy Steps, The Ultimate Guide to Email Marketing, and she is a popular marketing and branding keynote speaker. She is also a Certified Career Coach and Founder and Editor in Chief of Women on Business, an award-winning blog for business women. Susan holds a B.S. in marketing and an M.B.A in management and strategy.