For many lawmakers and business leaders who support the legalization movement, there are plenty of reasons to back their position. Legalizing cannabis provides access for people to reap the benefits of medical cannabis. It’s also tied into a social justice movement that aims to undo some of the damage done by the War on Drugs.
But there’s also another strong argument: the economic benefits of cannabis. Those benefits include states and countries bringing in more tax dollars to support public services, but also extends to workers who enjoy more job opportunities.
As Investopedia notes: “One motivation for legalization is the economic benefits that can come from the regulated commercial availability of marijuana.” The investment website adds that as more states benefit from the economics of cannabis, it also provides “many compelling reasons to consider nationwide legalization.”
Some of the Specific Economic Benefits of Cannabis
The economic benefits of cannabis provide advantages in a wide variety of areas. In every case, it requires a legal cannabis system developed and run by the government to give cannabis businesses the framework they need to grow the industry.
Increased Tax Revenue
Governments generate significant revenue by legalizing and regulating marijuana. In states that have legalized marijuana, such as Michigan and Illinois, new sales records have routinely been made. The legal systems in these states generate hundreds of millions of dollars in sales each year.
There are now more than 400,000 cannabis-related jobs in the country. This includes jobs in dispensaries, grow houses, cultivation and processing, and distribution. There also are more jobs in industries that provide services to cannabis businesses, such as attorneys and marketers.
Reduced Law Enforcement Costs
By legalizing cannabis, states and countries (such as Canada) can lower the amount of money they must spend on enforcing marijuana prohibition laws. This frees up dollars to spend on other priorities. It also reduces the number of people going through the criminal justice system.
Boost in Tourism
Many states have seen an increase in the number of tourists visiting since they legalized cannabis. In the early days of cannabis legalization, Colorado reaped the benefits of being one of the few states with legal cannabis sales. Canada also has seen an increase in tourism since the country legalized cannabis nationwide in 2018.
Saving Money Through Cannabis Legalization
In addition to the potential to lower the amount of money spent on law enforcement for cannabis prohibition, governments can also save money on the criminal justice process as a whole. This is a key area to consider when thinking about the economics of cannabis.
For example, Investopedia cites an American Civil Liberties study that found federal marijuana enforcement costs are in the billions each year. Those costs would drop significantly if cannabis becomes legal at the federal level. President Joe Biden has already taken a step in that direction by starting the process of decriminalizing possession of small amounts of cannabis at the federal level.
Legalization results in lowered costs for police, fewer cases to clog up the court system, and less money spent on prisons as fewer people get arrested.
Legalization also provides investment opportunities in the cannabis industry, an area where many celebrities such as Woody Harrelson and Snoop Dogg have blazed a trail. Investment opportunities include both helping fund startups as well as buying into specific businesses such as restaurants and cannabis brand companies.