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Benefits of Legalizing Marijuana For Economic

Oct 23



Although the Presidential election garnered the majority of the focus in November of 2020, there were several other important decisions that were made at the polls too including, a number of states that held elections to decide the future of the legal cannabis industry, in one form or in a different. Drawing inspiration from Colorado or Washington's book, four states - New Jersey, South Dakota, Montana, and Arizona--decided to make marijuana consumption for recreational purposes legal. Mississippi also voted to grant Missouri medical marijuana.


All in all many states are preparing to legalize marijuana (whether for recreational or medicinal usage or both), and the impact has already been huge. Legal cannabis companies have risen to include companies that study and develop medical cannabis products and those that cultivate and sell cannabis. Overall, more than fifty percent of U.S. states have medical marijuana laws and sixteen states have legalized certain levels of marijuana to be used for recreational purposes as well.


The economic advantages of legalizing marijuana are already evident as the first states have made moves to alter their legal position. Legalizing marijuana could affect the state economies and big money for the federal government. Below we will explore the most important economic advantages.

Impact of Tax Revenue

In recent years, Colorado and Washington have experienced higher than expected marijuana sales. This has resulted in an increase in tax revenue. The state collected over $302 million in tax and other fees for recreational and medical marijuana. Colorado's sales totaled more than $1.7 billion.78 The sales in the U.S were $12.2 billion in 2019 and expected to reach $31.1 billion in 2024, according to the report of Arcview Market Research and BDS Analytics.9 Local research supports this view too; a report from the Colorado State University-Pueblo's Institute of Cannabis Research recently discovered that the legal cannabis industry has contributed more than $80.8 million to local economies in the year 2017, principally through taxes and fees.10 Should marijuana be legalized at the federal level the benefits to the economy could be exceptional An analysis by the cannabis analytics company New Frontier suggests that federally legal marijuana could yield an additional $105.6 billion in total federal tax revenue by 2025.


This is the carrot several states have been trying to get. According to reports, California's marijuana sales have brought in 411.3 million in excise taxes, $98.9million in cultivation tax, $335.1million in sales tax12 according to the Massachusetts Cannabis Control Commission.13

Jobs and income

The initial step in the process of states that have already voted to legalize medical marijuana would be setting up dispensaries and nurseries. These facilities will not only provide jobs but also help to stimulate economic activity in these regions. California and Nevada have these facilities. The impact on the economy of the sector is now more quantifiable.

An RCG Economics and Marijuana Policy Group study on Nevada states that the legalization of recreational marijuana in the state can create more than 41,000 jobs by 2024 and generate over $1.7 billion in labor income.14 The ICF study estimates at the very least 81,000 more direct, indirect, and induced jobs in California as a result of legalized marijuana sales. The study also forecasts an increase in income of at minimum $3.5B.15


New Frontier's study on the effects of federally legal marijuana indicates that nationwide legalization could lead to 1 million jobs in 2025.11 These jobs could be derived from the rapidly growing sector that is expected to grow across the country. Workers would be required to grow and process, distribute, and sell cannabis-based products. There are also many additional industries related to the legalization of marijuana, even if they are not directly involved with its production or distribution. These could include software developers, financing services construction companies as well as many others.

Investment Opportunities

The potential for massive economic gains on the local and national scale due to legal marijuana is huge according to 420ID. Legal marijuana could also help investors from the United States as well as abroad to protect their portfolios of investment. Although marijuana is still illegal at the federal level, it's hard for investors to profit from the rapid growth of the sector. There are few marijuana-related companies trading publicly traded stock exchanges. Investors have the option to work with over-the-counter exchanges. But, the majority of the best businesses within the legal cannabis industry are located in Canada and other countries.


Should marijuana become legal on the national level the marijuana businesses would be able to list their stocks on any U.S. exchanges, thereby enhancing liquidity and opening up opportunities for investors to more? Investors could show an ardent enthusiasm for the marijuana industry if the current rate of growth within the cannabis sector continues to grow.

You Save Money

In assessing the economic benefits of legal marijuana it is crucial to consider the amount of money that might be saved and also the income that could be generated by such a procedure. Federal marijuana enforcement costs a few billion dollars annually. A report in 2013 by the American Civil Liberties Union found that the costs at the period were about $3.6 billion each year.16 The more states that have legalized cannabis, the lower the cost of enforcement will likely be; if marijuana were to be legalized on a national level and this was the case, costs could be reduced significantly. A wider range of marijuana-related cases in the courts would be dismissed from the controlled substances list, which would mean fewer convictions, and save more money.


Legalized marijuana could also aid medical users of cannabis-related products. It's likely that marijuana will be more legal in the U.S. This could lead to the price of marijuana dropping. While this might not appear to be a good thing for the tax revenue and for companies that sell marijuana, it could prove to be a boon for businesses seeking to maximize their profits. Cannabis-related products used by patients to treat their illnesses would be greatly benefited by reduced prices.


  • There has been a growing popular movement within the United States to legalize marijuana for recreational and medicinal uses as well as recreational use, with a few states have adopted similar measures already.

  • One motivation for legalization is the financial advantages that could be derived from the regulated commercial availability of marijuana.

  • More tax revenues employment growth, tax revenues, and investment opportunities are powerful incentives to push for legalization.

Bottom line

There is ample pushback against the idea of legalizing marijuana across the country. Critics cite the potential for confusion between law enforcement personnel seeking to keep pace with the changing rules, worries about increased homelessness or youth use of the substance as well as the risk of lower property values, and more. A majority of people oppose changing the status of marijuana's regulation as it would imply changes to the status existing. These reasons are all combined to diminish the chance that marijuana will become legal at a national level anytime soon. But, as more and more states decide to remove marijuana usage from the law in different ways, and as the economic benefits of a legal cannabis market begin to emerge, there are also many compelling reasons to think about all-encompassing legalization.

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