The Economics of Marijuana Legislation
By Connor Touhey | March 31, 2022
Even if you have been living under a rock for the past couple years, there must have been at least some point where you heard about the topic of Marijuana legalization. For decades, there have been people advocating to legalize cannabis in the United States. While this once seemed futile, in recent years, many states have been passing legislation legalizing recreational cannabis. In 2021 alone, 4 states (New York, New Mexico, Connecticut, and Virginia) all legalized recreational Marijuana. Is it safe to say that legalization is on the up and up? And if yes, what does this mean for the economy? Well to put it plainly, it would be good. Let’s look at tax revenue. In 2019, Colorado collected over $300 million in taxes/fees on cannabis, which is quite a staggering figure. If legalized federally, it is estimated that marijuana could generate over $105 billion in aggregate tax revenue by 2025 alone. But tax revenue is only a small piece of the puzzle. In California, legalizing marijuana led to an additional 81,000 jobs and $3.5 billion in labor income. If legalized federally, it is estimated that around 1 million new jobs would be created by 2025. Once again, all of these are staggering figures. Furthermore, federal legalization would lead to investment opportunities on stock exchanges - something that is not currently possible due to federal law, as well as a decrease in government spending for drug enforcement surrounding marijuana. This creation of investment opportunities and reduction of government spending would further benefit the economy.
The topic of marijuana legalization can be sensitive to some people, which I completely understand. There are people who believe that marijuana should be kept illegal due to moral, health, or other reasons. But I want to make it clear that I am solely focused on the economic side of this issue. And when looking at the topic of legalization through an economic lens, it is apparent that legalizing marijuana would help the economy, create jobs, and lessen government spending.
Edited by Maggie Reddington