Economic Impact


By Eli McVey / Marijuana Business Daily /

The U.S. cannabis industry is poised to inject nearly $70 billion on an annual basis into the American economy by 2021, an eye-popping figure that underscores the broader economic impact for towns and municipalities that accept legal marijuana businesses into their communities.

Estimates published in the newly released Marijuana Business Factbook 2017 show the total economic impact of legal marijuana sales rising from $16 billion-$18 billion in 2016 to $48 billion-$68 billion by 2021 – a 241% increase.

The projections are another example of marijuana’s rapid transformation from an industry dominated by black-market players into a legitimate and considerable economic force, quickly becoming a major job generator and bringing new business opportunities that produce significant ripple effects across the country.

Based on sales of medical and recreational marijuana at the retail level – including flower, infused products and concentrates – the estimates use an economic multiplier of four to quantify the industry’s overall contribution to the economy, showing how revenue generated by cannabis businesses percolates through communities, cities, states and the nation.

In other words, for each dollar spent by marijuana patients/customers at the retail level, an additional $3 in economic benefit is realized – much of it at the local level.

How Marijuana Business Affects the Economy

Wages paid to employees of cannabis companies benefit many other local businesses, given that workers spend a portion of their earnings to buy food from a grocery store or dine at a restaurant.

Marijuana businesses collectively pay hundreds of millions of dollars in state and local taxes, which fund projects including roads and rural hospitals as well as government programs such as education.

The launch of a new cannabis business – cultivation facilities, in particular – generate real estate and construction activity, often in economically disadvantaged areas of a town or municipality.

The Current Status of Cannabis Legalization in the U.S.

With recreational or medical legalization measures passed in 11 markets last year and several more states that have previously legalized marijuana – including Hawaii and Maryland – set to launch in the coming months, the cannabis industry is poised for strong, continual growth well into the future.

The Economic Impact of Cannabis Retail Sales in the U.S.

In 2018 recreational and medicinal sales are expected to total $6.7- $8.8 billion. Medical marijuana continues to grow even though more legal adult recreational states are expected through 2021.

In states with some form of legal marijuana sales (recreational or medical) industries such as real estate, construction, security, legal, packaging companies, iT services, and infrastructure are expected to see an impact of 34 – 46.4 billion dollars by 2019. In fact, ancillary businesses that serve industries outside of cannabis have 7 percent higher profitability than those that don’t.

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