Election season is in full swing, and so is the biggest vote on cannabis legalization in American history. Remarkably, the rhetoric over the various legalization initiatives has been quite tame in comparison to that of the presidential election. No one has claimed, for example, that legalization will cause crazed pot smokers suffering from reefer madness to go around grabbing people by the pussy.
Aside from the usual doomsday warnings from a few marginalized prohibitionists, the conversation about cannabis legalization in this election has mostly been about money. Government officials are seeing the dollar signs stemming from a brand new stream of tax revenue, and big-money investors are seeing the dollar signs from an industry that has already proven to be quite lucrative despite major issues with federal taxation.
The facts around the economic impact of legalization have become even clearer thanks to a landmark study by the Marijuana Policy Group, commissioned by the state of Colorado. For the first time, the study considered the indirect impacts of legalization, such as the increased demand for goods and services driven by newly-legal cannabis businesses. The results are striking.
In 2015, the cannabis industry brought 18,000 new full-time jobs to Colorado, generated $2.4 billion in economic activity in the state and sent $121 million in tax revenue to the state. That is three times more tax revenue than the alcohol industry. By 2020, cannabis is expected to bring in more tax revenue than cigarettes. "If this is done right, regulated right, taxed right, this industry can bring real economic benefits to a state," the study's authors conclude.
In California, where polls show voters mostly in favor of bringing legalized cannabis to nearly 40 million more Americans, state tax revenues are estimated to reach a whopping $1 billion annually. Tax rates would be similar to rates elsewhere, with a 15 percent statewide tax to which local governments could add their own tax. A large cannabis consulting business in California recently announced a $100 million investment fund ready to lend capital to businesses as soon as the initiative becomes law.
In October, Smoke Signals cited a Pew Research poll estimating that 57 percent of American adults favor legalizing cannabis. Those numbers now appear to be on the low end, as more recent polls by Gallup and the American Values Survey have put support at 60 percent and 63 percent, respectively.
Voters are also seeing examples, in states such as Oregon, of cannabis regulatory systems that are working. The Marijuana Policy Group study, for example, concludes that the tremendous growth in the legal cannabis industry is not coming from new demand for cannabis, but rather from a movement of economic activity from the black market to the legal market. That was the goal of legalization laws everywhere.