Legalizing Marijuana: The Upcoming Economic Effects
The issue of legalizing marijuana is a polarizing one to be sure, although it’s interesting to note that the number of people pro-legalization is gradually growing. In the USA alone, marijuana has been legalized in a number of states within the space of a few years, and if current trends are anything to go by, then it will be legalized in a few other states by the end of the next election period as well.
Read on to find out how the legalization of marijuana will affect the US and other countries.
Why Should Marijuanas Be Legalized?
There are quite a few valid reasons behind legalizing marijuana, with the primary one being the fact that legalization directly and positively impacts the economy of the affected region.
For example, we can already see the economic effects of legalizing marijuana in places like the state of California in the US, whose cannabis market is worth a reported $8.5 billion, an amount which is considerably larger than that of the state’s biggest agricultural markets, including almonds that bring in $5.2 billion, the grape industry which is worth $5.6 billion and the dairy industry (milk and cream), which is worth a reported $6.1 billion.
In fact, recent stats show that the state of California actually has the biggest regulated cannabis market in the world, and the region is attracting even more entrepreneurial innovation than ever before. Initially, the cannabis market in California only consisted of medical marijuana, and as a result was worth much less at $2.81 billion.
However, since the legalization of cannabis for adult recreational use, the industry has multiplied in a relatively short period of time, and is projected to see an annual growth rate of $23.1% per annum between 2018 and 2020. By the end of that period, the regulated industry is set to be worth $6.5 billion or more.
It’s not only the private sector that stands to benefit from marijuana legalization for adult use, as the state is set to gain $1 billion or more in collected taxes from the industry, and this includes cultivation taxes related to trimmings and buds, as well as a 15% levy on all marijuana sales.
In fact, 59% of marijuana sales in the state of Colorado can be attributed to marijuana that was purchased for recreational use, and industry sales in this state also grew by 42.2% from the year 2014 to 2015, while significantly reducing the amount of income generated by the marijuana black market.
That’s why it’s not surprising to learn that the marijuana industry in Colorado has exceeded the growth of large industries like multi-unit residential construction and sports and performing arts venues, and all of this within the second year of legalization.
How Legalizing Marijuana for Recreational Use Can Affect Medical Marijuana
Another benefit to legalizing marijuana is that it’s going to encourage more studies and research to be done in order to establish many of the claimed benefits of this product, which is very important considering the fact that marijuana is one of the most under-researched drugs in the world.
Additional and thorough research will most likely lead to the discovery of even more medical benefits while attracting further innovation and investment.
Currently, Israel is the front-runner when it comes to marijuana research, as the country boasts more than 100 on-going studies on the effectiveness and safety of marijuana use for a number of medical issues.
This has led to exponential foreign and US investment to the tune of $100 million. These funds are primarily being invested in start-ups, delivery devices and patents, with investment expected to grow ten-fold in the next two years alone.
However, the US is slowly but surely catching up, having legalized marijuana for medical use in 28 of its states, while recreational use has been approved in 8 additional states including Washington DC.
The economic benefits of legalization are also trickling down to the people in the form of jobs, as the cannabis sector is not only one of the fastest growing in the US, but employs 100,000 people and growing.
Needless to say, legalizing marijuana could lead to even more job creation, as the cannabis plant is versatile enough to be used in the creation of a number of different products, from cookies and candies to lotion sprays and beverages.
Check out some of the unique job positions created by the growth of the marijuana industry:
- Master Grower – Following a specialized grow schedule, the master grower manages the process of designing and building the grow operation while ensuring that daily records for lighting and chemicals are kept up to date.
- Trimmer/Cultivation Site Worker – As the title implies, the trimmers make sure that the marijuana plants are properly trimmed and maintained in preparation for production.
- Budtender Dispensary Agent – This agent has to be very knowledgeable about different marijuana strains and their effects on various health ailments.
- Extractor – The extractor produces concentrates or hash using marijuana, which means that they have to know a great deal about the technical process involved and which safety measures to take.
- Cultivation Supervisor – This person acts as a supervisor for the growing and trimming process of the marijuana plants.
- Cannabis Chef – The cannabis chef is a master at making cannabis-infused foods that taste great.
- Dispensary Manager – The dispensary manager is the crossing point between different stakeholders such as the staff, landlord, vendors and law enforcement. Their job also involves maintaining proper records, training workers, organizing dispensary transactions, communicating with grow sites, educating the patients, understanding the marketing side and keeping up with the marijuana state laws.
- Lab Workers – The lab workers are there to test the products before they go out into the market, to ensure that they don’t have any heavy metals or pesticides that might be harmful to consumers while making sure that they have the right cannabinoid quantities of THC and CBD.
- Marketing/Sales Associates – This team is responsible for marketing the brand through various means, creating logos and generating sales.
- Security – Security guards have to stay on-site to ensure the safety and security of the employees and patients. It’s also their duty to go with the dispensary manager to the bank when they make cash deposits.
- Delivery Driver – The driver should not only know how to drive but must have good communication skills because they’ll be the ones to deliver the product to the patients.
In addition, the tax returns collected from the production and sale of cannabis-infused products is another considerable source of income, as evidenced by the fact that the state of Colorado has collected over $120 million in excise and sales tax for marijuana in 2015 alone.
Further research shows that the state of Colorado gains $2.40 per dollar that’s spent on retail marijuana products.
Not only that, but the marijuana industry also benefits related sectors.
For example, the growth of the marijuana retail industry creates a higher demand for goods and services such as web designers, security personnel, electricians and cash register systems.
New marijuana retail outlets mean that previously deserted warehouses will now have tenants, which will boost the commercial real estate sector, and the construction industry will also benefit from the construction of new retail outlets, dispensaries and grow warehouses.
In fact, the state of Colorado has even created a group of office spaces meant to foster the exclusive incubation of marijuana businesses in the area, which has earned the area the nickname ‘Cannabis Silicon Valley’.
On the other hand, the Canadian government is planning to legalize marijuana for recreational use in July 2018, and it makes sense considering that Canadians used $6.2 billion worth of marijuana in 2016 alone.
Aphria, currently one of the biggest suppliers of legal marijuana in Canada that’s licensed by the federal government, is looking to expand its operations 1 million feet of growing space in order to produce 20,000 pounds of marijuana per year.
To give you some context, 1 million feet is equal to almost 18 football fields! All of this expansion is in preparation for the demand that’ll come from the legalisation of recreational marijuana later on this year, as the cannabis market is expected to reach $12 to $22 billion annual growth as a whole, which is not surprising considering that Canadians spent over $5 billion on marijuana in 2017.
Obviously, Canadian growers and businesses are seeing increasing value in marijuana buds, especially since it produces the powerful and highly profitable cannabis oil.
Previously existing marijuana coffee shops and lifestyles stores like Tokyo Smoke also want to benefit from legalizing marijuana for recreational use.
These spaces are expected to expand all over cities like Ontario and Toronto, where it will be legal to market marijuana goods like well-crafted smoking pipes, crushers, bongs etc.
Most of these products are designed and made for the high-end consumer and go for exorbitant prices, but because they support local artisans, they are seen as a huge benefit to the local economy, and a lot of the stores that sell them are expanding as a result of the growing demand.
Moreover, the Canadian government is expected to collect a whopping $400 million in annual tax revenue from the cannabis market, especially due to the sale of marijuana edibles.
On the other hand, it looks as though growers and retailers are also teaming up to provide customized and locally produced cannabis edibles, as popular lifestyle brand Tokyo Smoke has reportedly partnered with Aphria to produce its own line of cannabis-infused products for the discerning buyer.
The only downside is that cities such as Ontario will be highly regulating the recreational marijuana market by allowing only the government to sell, effectively closing down existing suppliers.
This might cause long line-ups that will discourage consumers from supporting government stores, which some analysts are already predicting that they will sell a low quality product.
However, the Ontario government is also planning to make marijuana available for sale online, so that it can be delivered to Ontario addresses only, thus making the purchase of the product more convenient for the consumer and discouraging black market sales.
Regardless, a lot of people think that Ontario’s strategy will fail because it’s highly restrictive to the market, and will thus not encourage the type of economic boom that’s seen in states like Colorado and California in the US.
The good news for consumers is that a Canadian task force which was given the responsibility to make recommendations based on thorough research have put in a few good words for the customers.
For example, the task force recommends that new national laws should allow each province to decide how to sell and distribute marijuana in their territories, while enabling the common man to grow their own marijuana with a limit of 4 plants per household, at a maximum height of 100 cm for each plant.
From creating a new tax revenue stream to encouraging entrepreneurial growth and employment opportunities, the legalization of marijuana has many economic benefits.
Recreational states like Colorado, California and Oregon in the US are already seeing incredible economic growth as a result of the booming industry of the green economy.
Edible marijuana products are the fastest growing segment of the emerging marijuana market in all these areas, and is already rivaling established agricultural industries like the grape and dairy segments.
Also, some of the predictions being made about the Canadian marijuana industry include realizing $5 billion in sales per year and collecting a 17% tax rate that emulates that of the state of Colorado in the US.
Legalization also encourages more research to be conducted on the safety and effectiveness of marijuana in order to establish proper dosage, thus encouraging the creation of marijuana testing labs and research facilities.
In light of these and many other statistics, it’s safe to say that legalizing marijuana is a highly beneficial move that boosts a country’s economy while ensuring safe use and a significant decrease of the black market.