Here’s what really happens after a state fully legalizes marijuana (Details)

Legal marijuana is the best thing to happen to the economy.

If you don’t believe that, take a look at the hard numbers.

As it stands right now, eight states (Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, and Washington state) and Washington, DC have laws on the books legalizing marijuana for recreational use. California, Maine, Massachusetts, and Nevada legalized cannabis in November of 2016, while Colorado and Washington state were the first states to do so in 2012. Given that those two states have had legal cannabis the longest, it’s worth looking at Colorado and Washington state as the best case studies for the economic benefits of legal cannabis.

Chart by Governing magazine

According to Forbes, two of the top five state economies as of 2016 were Colorado (#5) and Washington state (#2). Washington state has GDP growth of 3.03 percent, and an unemployment rate of 5.8 percent. Colorado’s GDP growth rate is 4.66 percent, and its unemployment rate is at an astoundingly low 2.9 percent. Both of these states have growth rates significantly above the national average of 2.6 percent as of 2015, according to the World Bank.

In 2015 alone, Colorado’s legal marijuana industry is credited with creating more than 18,000 new jobs and generating an additional $2.4 billion in economic activity. When taking these numbers into account with data from years prior, the booming marijuana industry seems to be a key factor. In 2013 — shortly after Colorado voters passed a ballot initiative legalizing recreational marijuana statewide — the Denver Business Journal reported that Colorado had the sixth-highest GDP growth rate in the nation. The 3.8 percent rate Colorado recorded is more than double the growth rate from 2011, before marijuana was legalized.

Both of these states’ strong economic performance is likely partially due to marijuana tax receipts. The Seattle Post-Intelligencer reported in 2016 that legal marijuana sales in Washington state had already topped $1 billion by July of last year. And in Colorado, the state’s pot shops sold $1.3 billion worth of marijuana in 2016 for more than $200 million in additional tax revenue.

The additional revenue is undoubtedly beneficial to state budgets. Colorado’s Joint Budget Committee report for the 2016-2017 fiscal year reported $11.1 billion for the state’s general fund available for appropriations. This is particularly notable, as that figure is roughly $1 billion more than the Colorado Fiscal Institute predicted in 2013.

2013 forecast chart from the Colorado Fiscal Institute

In Washington state, 60 percent of the state’s marijuana tax revenue is earmarked for Medicaid and other state healthcare programs, according to the Tacoma, Washington-based News Tribune. Marijuana money in Colorado is, according to the Denver Post’s Ricardo Baca, going toward a combination of capital school construction, college scholarships, and programs aimed at alleviating homelessness.

Legal marijuana is also boosting population growth. Between 2015 and 2016, the U.S. Census Bureau reported that both of those states experienced some of the highest population growth in the country. In 2010, Colorado had a little over 5 million people. As of 2016, there were 5.5 million people living in the Centennial State, marking annual population growth of more than 91,000 people, ranking it #8 out of all states in total population growth. Washington state, for its part, grew by more than 127,000 people each year since 2010, making it the fourth fastest-growing population.

2016 data from the U.S. Census Bureau

2016 data from the U.S. Census Bureau

When taking all of this data into a larger context, it’s hard to deny the potential role of legal marijuana in explaining these states’ booming economies and populations to legal marijuana.

However, the newfound fortune of these states is in jeopardy, as Attorney General Jeff Sessions has hinted at instructing his Department of Justice to enforce federal marijuana laws in states that have legalized it.

“States, they can pass the laws they choose,” said Sessions during a February speech at the National Association of Attorneys General. “I would just say, it does remain a violation of federal law to distribute marijuana throughout any place in the United States, whether a state legalizes it or not.”


Tom Cahill is a writer for the Resistance Report based in the Pacific Northwest. He specializes in coverage of political, economic, and environmental news. You can contact him via email at [email protected], or follow him on Facebook by clicking here.