Movers and SHAKERS
Image credit: RODNAE Productions
The Full Value of Marijuana on the U.S. Economy
Now that the Marijuana Opportunity Reinvestment and Expungement (MORE) Act has passed the House, the debate about the benefits of legalization will rage in the Senate before it votes. There’s no doubt the conversation will include reduced crime, reduced criminal justice costs, public health, and increased tax revenue while stimulating the economy. But, will their measure of economic stimulation and benefit be accurate?
Cannabis as an Economic Stimulant
As the economy has come into sharp focus as of late and impacts most Senator’s constituents, this may be the decider that changes the minds of those on the fence. Economic benefits may trump all others, allowing the bill to get the needed 60 votes, making the Oval Office the last hurdle toward legalization on a national level.
The economic benefit often focused on by state governments is that which is most easily measured, tax revenues. But as those in Washington know, a few extra jobs and a few extra dollars go a long way to stimulate economic growth. In this category, the cannabis industry has a lot to offer the country. Money changing hands for goods and services include the easy to recognize sales and the ancillary benefits of commerce beyond the doors of a dispensary.
Cannabis Industry's Forecasted Benefit on U.S. Economy 2021-26
Data Source: MJBizfactbook
Marijuana Industry’s Impact (Beyond Sales)
Using data compiled by MJBizDaily, the total U.S. economic impact of marijuana sales that don’t include direct sales themselves, in 2022 is expected to rise 20% to reach $99 billion this year. And under the best estimates exceed $155 billion in 2026.
To measure and forecast the industry’s economic impact, the data team at MJBizDaily analyzed similar industries, consulted with economists, and then calculated and applied a standard multiplier of 2.8 on projected recreational and medical marijuana retail sales. The nature of a new and unique industry adds a greater element of unknown compared to forecasting other industries, but the methodology was well thought out and the measurements and factors created are as accurate as possible.
Beyond straight retail sales, which are also projected on the chart above, the industry includes farming, manufacturing, marketing, and hospitality. Marijuana production starts with agriculture at the farm. Economists use a multiplier of 1.9 on agricultural components. This equates to $11 billion for the U.S. economy, just in this category. To put it in a way that more visually shows the benefit, for every $10 consumers or patients spend at marijuana retail locations, an additional $18 will be injected into the economy.
That higher economic benefit comes from the day-to-day needs increased and then satisfied by workers in the cannabis industry, and then the further impact that includes spending on life’s necessities such as housing, transportation, entertainment and more. Not very different than the massive impact that the stimulus checks had during the pandemic, money multiplies across the economy as it is spent and then put in someone else’s hands for their use.
Cannabis, as with other industries, has an impact on many other sectors that make its overall economic impact far greater than simply measuring the sales of cannabis. While the Senate and the President will consider many factors in deciding whether the MORE Act should become law, the overall positive economic impact should not be understated.
Managing Editor, Channelchek
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