The 2016 election resulted in California, Nevada, Massachusetts, and Maine joining Colorado and Washington by making recreational marijuana consumption legal. Many believe that this will put these states on the course to reap certain economic benefits. This has been informed based on the success seen in Washington and Colorado.
Colorado collected in 2015 over $135 million in taxes on medical and recreational marijuana. And in Washington, dispensaries have sold over $1 billion in recreational marijuana since legalization in 2014. It is estimated that overall sales in the industry across the United States will rise to $20.1 billion by 2021. Last year, the sales were at $6.7 billion.
In California, with the passing of Proposition 64, it is estimated that the state may make $1 billion in tax revenue according to estimates conducted by the government. The study also is projecting that California could see over 1,200 new jobs for testing and handling marijuana. But the increase in jobs and tax revenue is just one slice of the pie.
In a previous article, we discussed the possible collaboration of wine country with the marijuana industry. Though it remains to be seen if this will become fully realized, the legalization of marijuana could mean a bump in tourism in the state. According to the LA Times, “there are more than 260 million visits to California from people from out of state each year, and the visitors spend more than $122 billion in California, much of it on leisure goods and services.” Moreover, it is estimated that tourists have spent $7.2 billion on wine. Though some in the wine industry are worried this will hurt their sale margins, it could potentially bring even more people to the state and generate more revenues. Only time will tell if that will be the case or not.
One of the main struggles for this new legal market for marijuana in California, and other states who have legalized recreational use is going to be the elimination of the underground, illegal market. After the state has adopted regulations, legal recreational marijuana use is estimated to make up 61.5 %, with illegally purchased pot making up 29.5%, and medical marijuana making up the remaining 9%. Some of the main reasons why a black market continues to exist for marijuana is over-regulation as well as price.
Besides battling to diminish the illegal market, another challenge will be the backlash from cities who do not want the extra added pot tourism. Cities such as Laguna Beach and Pasadena have banned marijuana sales already. Many have been concerned about similar local government bans in Nevada. Though the economic benefits are there in the projections, it will be a matter of what areas will welcome the added tourism that comes along with legalization.