The handwriting on the marijuana wall was correct. Marijuana is beginning to prove itself a worthy revenue for states approving it, even if only for medicinal purposes. As of 2015, 23 states as well as the federal district of Washington D.C., have legalized medical marijuana and three of those states (Colorado, Oregon and Washington) have also legalized it for recreational use.
Christopher Ingraham wrote about the staggering numbers in the Washington Post, providing information from the Colorado Department of Revenue. “In 2014, Colorado retailers sold $386 million of medical marijuana and $313 million for purely recreational purposes. The two segments of the market generated $63 million in tax revenue, with an additional $13 million collected in licenses and fees.”
Ingraham went on to explain “the total economic impact of the state’s marijuana industry is likely greater, as these figures don’t include retail sales of products related to marijuana, like pipes and bongs, and they don’t account for increased tourist spending in other segments of Colorado’s economy, like hotels and restaurants. Total marijuana tax revenues are now expected to climb to $94 million annually by 2016, according to the latest projections. This would equate to a $1 billion dollar retail market.”
As for legislative opponents warning of dire consequences, Ingraham reported “Fatal car accidents in the state are flat, and well below the past-decade average (not terribly surprising, considering stoned drivers are considerably safer than drunk ones). Crime is down in Denver and the surrounding area.”
Clearly, as Divya Raghavan of Nerd Wallet pointed out after conducting a recent analysis, “Cash-strapped states stand to collect millions if they legalize the drug. Across the U.S., states could gain just over $3 billion in tax revenue from legal marijuana sales.” Poignantly stating the economic impact, Raghavan continued, “The U.S. stands to gain, according to our calculations, $3,098,866,907 in state and local taxes per year — that’s more than twice the entire budget of the Small Business Administration in 2013. California could gain the most from taxes on sales of marijuana. The state stands to take in $519,287,052, which almost covers the 2013 budget for the California Department of Parks and Recreation.” And these figures are “conservative estimates.”
Out Of The Red And Into The Green?
To say these figures are conservative is quite an understatement since they don’t factor in the reduced spending on law enforcement, incarceration costs, or the rapidly growing revenue as recreational cannabis is growing in acceptance and popularity. The growing acceptance is partly because of the changing population, as those prior to The Silent Generation (born between 1923 and 1944) are largely gone. Those remaining in The Silent Generation are quite familiar with recreational marijuana, having lived through the Hippie Movement of the 60’s, including the culturally historic Woodstock Festival.
Children of the Silent Generation, known as the Baby Boomers, were exposed to the former counterculture ideals that their parents lived through and marijuana use took a huge leap forward. In a Wall Street Journal article about the proclivity of Boomers to use illegal substances, Zusha Elinson reported, “Neil Howe, a historian and author of several books on generational trends, said that boomers have always stood out for their willingness to break with convention and take risks, which included using drugs. ‘They themselves continue to behave in a less inhibited fashion even as younger generations turn away from that type of risk taking,’ he said.”
A Shift In Public Opinion
According to Pew Research, half (50%) of Boomers now favor legalizing marijuana, among the highest percentages ever. In 1978, 47% of Boomers favored legalizing marijuana, but support plummeted during the 1980s, reaching a low of 17% in 1990. Since 1994, however, the percentage of Boomers favoring marijuana legalization has doubled, from 24% to 50%. Generation X, born between 1965 and 1980, came of age in the 1990s when there was widespread opposition to legalizing marijuana. Support for marijuana legalization among Gen X also has risen dramatically – from just 28% in 1994 to 42% a decade later and 54% currently.
The fact that legalizing marijuana would greatly help resolve the financial challenges in virtually every state, is laid out by Jeffrey Miron on prohibition.costs.org, referring to a government report in the Marijuana Policy Project. “This report examines the budgetary implications of legalizing marijuana – taxing and regulating it like other goods – in all fifty states and at the federal level. The report estimates that legalizing marijuana would save $7.7 billion per year in government expenditure on enforcement of prohibition. $5.3 billion of this savings would accrue to state and local governments, while $2.4 billion would accrue to the federal government. The report also estimates that marijuana legalization would yield tax revenue of $2.4 billion annually if marijuana were taxed like all other goods and $6.2 billion annually if marijuana were taxed at rates comparable to those on alcohol and tobacco.”
In this article, Miron cuts to the chase regarding the benefits of legalization. “Legalization eliminates arrests for trafficking in addition to eliminating arrests for possession, saves prosecutorial, judicial, and incarceration expenses and would reduce government expenditure by $7.7 billion annually.”
Revenue numbers have been rolling in for sales in 2014 and Anne Holland of Marijuana Business Daily reported “U.S. retail cannabis sales will rise more than five-fold over the next five years, from an estimated $2.2-$2.6 billion in 2014 to $7.4-8.2 billion in 2018, according to new financial data released today in the 2014 edition of the Marijuana Business Factbook.” In current numbers, it’s obvious that this revenue is not only substantial but greatly needed in our faltering economy.
Add in the growing number of uses for cannabis hemp in the industrial marketplace and you have a goldmine of revenue to revitalize the economy. So broad is the spectrum of uses, Mat McDermott on treehugger.com states, “From clothing, to food, to fuel, to a whole host of consumer and building products, not to mention helping in cleaning up soil pollution, it’s only slightly hyperbole to call hemp a wonder crop.”
We’ll just have to watch and wonder.
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