Here we will go over how the marijuana industry is impacting the economy.
The legalization of marijuana has created communities of happier, healthier individuals by having access to cannabis products. The health benefits of marijuana are highly researched, and many now know the positive impact it can have on an individual’s life. What has not been highly researched is the impact legalization has on the economy.
Keep reading to find out what we know so far.
More Job Opportunities
Every time a state legalizes marijuana, it is followed by a high demand for industry employees.
Since legalization has spread among the states, nearly 500,000 jobs have been created, and this growth is expected to expand to one million jobs by 2025.
For years Americans have been struggling with job shortages and high unemployment rates. This increase in jobs results in more earned income that is pushed back into the economy through purchases.
Additionally, as more individuals obtain these steady jobs, they can afford things that the government may be assisting them with, such as food and medical insurance. The government can then take those funds and put them to use in places that further help the economy, such as highway maintenance or law enforcement.
Law Enforcement Resource Allocation
Another impact that the legalization of marijuana has had on the economy is that the way law enforcement agencies allocate their funding has changed.
Before the legalization of marijuana, now-legal states were spending quite a bit of funding on enforcing marijuana laws. Now that those states have legalized either medical or recreational use, their resources such as time, energy, and money can be used on more important issues like city maintenance and keeping more dangerous crime low.
When the city is in good condition with a low crime rate, more individuals will open businesses or travel there, making a positive impact on the economy.
Increases in Tax Revenue
Having money flow into our local or state government is how we keep our economy booming, and revenue through sales tax is one of the best ways to do so.
Individuals purchasing products from a marijuana dispensary are charged two types of tax; sales tax and excise tax.
Sales tax is the standard tax most people are used to, and depending on the state, the sales tax may range anywhere from zero to sixteen percent.
An excise tax is an additional tax that applies to specific goods and services like fuel, airline tickets, tobacco, indoor tanning, and marijuana. The average excise tax is around $10-15 (some states charge a standard fee.)
In 2022, a total of nearly 12 billion dollars were received on the tax sales of marijuana. Naturally, that is a lot of money for the economy.
Increase in Tourism
Tourism is another great money maker for the local government and the legalization of marijuana attracts tourists.
When a marijuana consumer lives in a state where possession is still illegal, they may get the idea to take a trip to a state where recreational marijuana is legal. These road trips are fairly common, and as long as the individual consumes the marijuana in that state, the purchase is perfectly legal.
When a tourist or traveler spends a few days in a different state, it rakes in large sums of money from purchases like; transportation, hotels, dining out, souvenirs, events, and attractions.
Purchasing of Land
Property tax is another tax that keeps money flowing into the economy, and as marijuana is legalized, we see land and vacancies being purchased left and right.
Plots and vacant structures are used for cultivating marijuana, dispensaries, doctor offices, research, and more.
These purchases also help the economy by raising the market value of surrounding homes.
Cost of Living
Another way marijuana legalization has impacted the economy is through cost of living changes.
Being a legal state with access to marijuana and job opportunities puts the properties in high demand. With demand, comes inflation; therefore, we see many legal states raising their rent and home prices.
Legalization has also raised the cost of living by increasing the average local income. This increase raises the “local standards”, and price spikes can be found on everyday items like bread and clothing where the exact item would be cheaper elsewhere. Higher prices on local goods are not a guaranteed change; however, it does seem to be a common trend.
Although this may not be great for an individual, the extra revenue is great for the economy.
