The marijuana business is anticipated so as to add $ 92 billion to the U.S. financial system in 2021
From jobs to tax revenues to commercial real estate, the marijuana industry has a large and growing impact on the overall economy in the United States.
The total economic impact of US marijuana sales in 2021 is projected to reach $ 92 billion – an increase of more than 30% year over year – and over $ 160 billion in 2025, according to analysis of the newly released MJBizFactbook .
To measure the economic impact of the industry, MJBizDaily analyzed similar industries and applied a standard multiplier of 3.5 to projected retail sales for recreational and medical marijuana.
The numbers are a good guess as the structure of the marijuana industry is unique in that it encompasses activities in agriculture, manufacturing, and retailing.
The economic impact of the marijuana industry is not the same as the revenue from the supply chain, which is often used to estimate the “overall size” of an industry.
Rather, the economic multiplier paints a picture of the effects of the industry on the economy as a whole.
In this case, for every US dollar consumers and patients spend in retail stores, an additional US $ 2.50 is invested in the economy, much of it at the local level.
These effects come directly from the daily needs of workers in the cannabis industry, including spending on essentials such as housing, transportation, entertainment, and more.
Marijuana companies, consumers, and patients also pay hundreds of millions of dollars in state and local taxes that are used to fund state and local government activities, including schools and roads.
In addition, real estate is getting a boost from new retail, manufacturing and farming businesses moving to an area or established businesses expanding, increasing the demand for commercial real estate.
Growing and manufacturing marijuana can require large investments in equipment and technology that will boost not only the local economy but areas in the United States as well
The list goes on.
Using the same multiplier method can also provide some insight into the impact of selling recreational and / or medicinal marijuana on the local dollar.
The economic impact varies by state depending on the size, duration and type of market.
For example, California’s marijuana industry, the largest market in the United States, is expected to pump nearly $ 20 billion into the state’s economy in 2021.
No other state comes close to this amount.
But states like Colorado, Illinois, Oregon, and Washington will each allocate more than $ 10 billion to their local economies in the coming years.
Expect the same for markets in densely populated states like New Jersey and New York as they develop.
If we look at the population as a whole, some states benefit more than others.
California’s economic impact is possibly the greatest based on total dollars created, but other states have larger impacts on dollars on a per capita basis.
Based on new population estimates released this month from the 2020 US Census, Nevada will have an economic impact of around $ 1,917 per person this year this year.
The marijuana markets in Alaska, Colorado, and Oregon will also pump nearly $ 1,500 per person into their respective states.
California, which has almost twice the impact of these states, will contribute just over $ 500 in economic impact per person.
Of course, using the multiplier method for local impact analysis is not perfect. Government regulations and taxes, as well as other market fluctuations, can dramatically increase or decrease the US dollar marijuana sales that flow into the economy.
While it may be difficult to level these differences, the estimates give us a good idea of how the industry is contributing to the macroeconomic picture.
Andrew Long can be contacted at [email protected].