4/20: The Economics of the Marijuana Industry


Today, 33 states allow marijuana use for medical purposes, and 10 of those allow it for recreational use as well. The marijuana industry is continuously growing, as people lobby for a national legalization of recreational marijuana usage. Although many people simply want the legislation to pass because they want to do weed without breaking the law, the drug provides significant economic benefits as well. 

The marijuana industry opens up potential jobs for many people. Growing and dispensing the substance both require workers, and the growth of this industry can create jobs for tens of thousands of people in states where it is legalized. More jobs means less unemployment, which can lead to an improvement to the economy. The sale of the substance can also be economically beneficial, as the government can place taxes on it to increase their budget from every sale. In fact, this is already happening. In Colorado, weed sales in 2015 led to $996 million in sales and $135 million in taxes. Sellers made lots of money and the government was able to benefit off the sales as well.

Another significant economic benefit of the legalization comes from money saved. Marijuana enforcement costs billions of dollars, and people who are arrested for possessing the substance in non-legalized states face heavy sentences. Their time in prison is fueled by tax money, money that could be spent on many other things. Through legalization, the costs of enforcement will go down as simply possessing the substance would not lead to arrests and heavy sentences. The government would be able to save money by legalizing the product.

As more and more states make the shift to legalization of marijuana, the industry will continue to grow. This will mean increased sales, taxation, and as a result, increased economic benefits.


Sources:
https://www.investopedia.com/articles/insights/110916/economic-benefits-legalizing-weed.asp
https://www.kansascityfed.org/publications/research/rme/articles/2018/rme-1q-2018

Comments

  1. AnonymousApril 20, 2019 at 11:50 PM

    I'm interested in the affects of such changes on black market weed sellers. Dark web marketplaces like SilkRoad and GreenMarket stay afloat due to international markets, but localised sellers will have to deal with competitive quality of weed and actual regulations; the only thing they have going for them is that they don't tax the product. Will people be willing to buy state-sanctioned but taxed weed (which is presumably expensive), or will they be willing to risk buying cheaper weed from dealers? If legal weed and street weed are substitute goods, what would their supply and demand graphs look like in relation to each other?

    ReplyDelete
  2. AustinApril 22, 2019 at 9:19 PM

    Interesting post. The process which recreational marijuana is legalized opened up a whole market with its supply and demand. And as Hunter pointed out, the existence of a legalized weed market changes the black market for weed. The demand of marijuana used to be inelastic -- illegal dealers are the only people to ask when someone is indeed of the product. As the legalized marijuana market open, the demand become less inelastic.

    ReplyDelete
  3. AnonymousApril 25, 2019 at 11:05 PM

    Awesome post! This really gave some interesting insights of the marijuana industry. However, my main question is: where to draw the line? Which drugs are okay to legalize and which aren't? Where does weed lie on the scale? Obviously, some of the more dangerous drugs are still illegal. Will they ever become legal? When? Why? How will the people react? Why shouldn't it be the same as the legalization of marijuana?

    ReplyDelete

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