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Guess How Big the Economic Benefits of Recreational Cannabis Are For a City or State
A new study of economics show the benefits of recreational cannabis
At the time of writing, 21 states plus Washington DC have already legalized adult use cannabis.
Meanwhile, 37 states legalized the medical use of marijuana. This trend is expected to continue growing this year, which is not only tremendously good news for recreational and medical consumers, but for the economy as a whole. There have been several studies highlighting the economic benefits of legal marijuana, and how it helps societies and businesses as a whole can no longer be denied.
These findings tackle the arguments of the opponents of legalization, who say that recreational cannabis can harm society and health. They also argue that recreational cannabis can impede economic success. However, the data points to the opposite.
The latest study was conducted by researchers from San Diego State University together with Bentley University. The analysis, which was published by the National Bureau of Economic Research, is the first to study how recreational cannabis affects employment, salaries, and the general labor market. The researchers assessed data taken from the 2002-2020 Current Population Survey Merged Outgoing Rotation Groups, and factored in differences in approaches.
They found that there was “little evidence that RMLS [recreational marijuana laws] adversely affect labor market outcomes among working-age individuals.” On the contrary, the researchers observed employment and salary increases due to recreational marijuana laws. These patterns were more pronounced in adults older than 30 years old, as well as younger ethnic minorities and people who worked in agriculture.
“These results are consistent with the opening of a new licit industry for marijuana and (especially for older individuals) a substitution away from harder substances such as opioids,” they said.
Unlike other studies that took a look at the impact of recreational cannabis on the economy, with a focus on productivity, the researchers instead focused on the broader impact. That said, they discovered that marijuana reform was effective in paving the way for a new industry, leading to more job creation. It’s also significant that legal marijuana was found to be an effective deterrent against heavy alcohol consumption and opioids. Additionally, the researchers found that access to the adult-use marijuana market decreased criminalization, which inappropriately affects more racial minorities including Hispanics and Blacks.
“Longer-run labor market effects may differ as we learn about the effects of RMLs on cognitive development and human capital acquisition of those under age 21, which could take time to unfold and be reflected in market level effects on productivity, wages, and/or employment,” the researchers wrote. “Moreover, the labor market effects of reductions in criminal records could also take time to unfold,” they said.
They acknowledged the challenges of the COVID-19 pandemic in determining how the new legal markets will change in the near future because the pandemic caused a surge in sales, even more so after it had lifted. “Nonetheless, our findings answer some important early questions about the economic consequences of recreational marijuana legalization,” they said.
Other Studies
There have been similar studies using different methodologies in the past, yet they have yielded similar findings.
An early 2022 article in The Conversation took a dive into banking activity that occurred in the first four states to legalize adult-use marijuana. They found that banking activity in Colorado, Washington, Alaska, and Oregon saw significant increases compared to the rest of the United States, even if cannabis is still federally illegal. These findings don’t suggest that banks profited illegally from the rise of cannabis businesses, but rather it was an indication that economic activity has been boosted.
They analyzed data taken from regulatory filings to compare deposits as well as loans in banks in these states. Quarterly bank data through the years 2011 through 2017 was also analyzed to compare how they fared before as well as after marijuana legalization. They discovered an increase in bank deposits by an average of 4.3% in the four states following legalization of marijuana as well as a 6.5% jump in loan volume.
As legalization of cannabis continues to spread in the United States, we expect that this will only reflect in even more enhanced economic benefits.
Furthermore, there is data that legalizing cannabis will also benefit state governments. Tax revenues collected by the governments can be used to subsidize important programs and social services, including the construction of schools, infrastructure, education, behavioral health, alcohol and drug rehab centers, public libraries, conviction expungement, and so much more. It will all come full circle as well when these funds are allocated to communities that were unjustly affected by the war on drugs.
When state and local governments are able to successfully regulate recreational use markets, these lead to thousands of new jobs. Last year, data compiled by Leafly and Whitney Economics revealed that state-licensed marijuana industries generated more than 100,000 new jobs just in 2021 and gives the industry gives full-time jobs to 428,000 people. “In the eight years since the nation’s first adult-use cannabis stores opened, the industry has created hundreds of thousands of new American jobs,” says the report. “There are more people employed in the cannabis industry than there are hair stylists, barbers, and cosmetologists – combined,” it reads.
Conclusion
Legalizing marijuana will provide a needed boost for state economies, while generating valuable revenue for federal as well as state governments. Despite the fact that federal governments and state law are still conflicted on the issue, states continue to push on with marijuana legalization.
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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