3 Ways Marijuana is Impacting the Economy
Since Oregon became the first U.S. state to decriminalize marijuana in 1973, the public
has scrutinized its impact. Now with eight other states legalizing the sale and possession of cannabis for recreational and medical use, and two more legalizing the drug’s personal use but not its commercial sale, examination of the impact of marijuana is more intense than ever before. Much of the discussion has focused on the health impact of marijuana, but what about the financial ramifications? Take a closer look at the ways legal marijuana is impacting the economy.
Legalizing Marijuana Is Expensive
State governments must create new regulatory systems to legalize marijuana. Keeping those systems operating also requires staff members, at a significant cost to government agencies.
Examining costs in Oregon, American pioneers in the legalization of marijuana provides an idea of what all states legalizing marijuana face. The state was one of the first allowing its citizens to possess small amounts of marijuana and to legalize medicinal marijuana.
But it took until 2014 for Oregon citizens to vote in favor of legalizing recreational marijuana sales, forcing the state to implement new regulatory systems. The Oregon Liquor Control Commission expected to spend $300K in 2015, $2.5M in 2016, and $1M in 2017, creating the new system. It also anticipated that the change would increase its yearly operating costs by $3.2M.
Additionally, the state’s government agencies anticipated hiring professionals to advise about rulemaking and marijuana-infused foodstuffs, and to license marijuana processing and testing facilities. The police department anticipated additional training costs and the need for more detectives. Their wages and training would cost roughly $600K each year.
Marijuana Industries Create New Jobs
As with any new industry, legal marijuana creates new job opportunities. A range of opportunities in recreational marijuana testing, processing plants, and healthcare companies specializing in medicinal marijuana therapies provide an economic boon.
A 2018 report from New Frontier, cited by Forbes, estimated that legalizing cannabis across the country would immediately create 654K new jobs. By 2025, the cannabis analytics company estimates that figure could rise to up to 1M. Job creation is closely linked to a strong economy.
Marijuana Stocks Are Soaring
Investors are reaping the benefits of marijuana’s positive impact on the economy, with stocks in a variety of marijuana-related businesses. Stocks listed on the U.S. Marijuana Index experienced gains of more than 71 percent between June 2017 and June 2018. Compare that to the relatively meager 12 percent average gains of S&P 500 companies.
Some of the best marijuana stocks are performing even better. For example, in 2017, the stock price of Aphria, a producer of dry cannabis and cannabis oils, increased by more than 146 percent. A recent deal with Canadian pharmacy chain Shoppers Drug Mart should see Aphria’s stocks post an even greater gain in 2018.
While legalizing marijuana is an expensive process initially, the economic impact of changing the legislation has been very positive. For government agencies, the business community, and investors, the potential financial gains provide one of the strongest arguments for legalizing marijuana across the United States.
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