This sample essay will discuss how along with increased revenue from car sales and home sales, revenue from recreational and medical cannabis use is bolstering many state economies across the nation, especially Colorado and Washington, the only two states where recreational and medical cannabis is legal (Update: Marijuana is now legal in 8 states for recreation).
What does a cannabis economy look like?
A new study by Arcview Market Research indicated that legal retail cannabis sales to adults should add up to a staggering $6.7 billion dollars by 2017. The same company estimated $998 million in revenue for 2015, which was an increase of 184 percent over 2014 numbers. In the United States overall, the legal cannabis sector grew by 75 percent in 2014 – and it’s still growing at fantastic rate.
For investors, entrepreneurs, and those benefiting from the positivity of medical cannabis treatments in the United States, those are some pretty good numbers. They are also great numbers for the work forces in states like Colorado, Washington, and Oregon who have great cannabis growing climates and need the jobs the cannabis industry can provide.
Market research on a cannabis economy
According to Arcview Market Research’s Executive Summary report for 2015 (free for download from Arcview’s website),
“legalization of cannabis is one of [the] greatest business opportunities of our time”
and growth will continue well into the future. Arcview noted that this is the first report in which the Colorado and Washington legal cannabis markets have stabilized to create greater growth prediction accuracy – in other words, we now have a solid idea of what sales will look like annually in these states (barring any major changes by a future anti-cannabis president).
Nationally, legal sales grew from $4.6 billion to $5.4 billion in the space of one year; the growth in 2016 is expected to ascend to $6.7 billion over the next two years, increasing 24 percent. Arcview estimated that revenues in 2020 will be $21.8 billion dollars – a testament to the amount of jobs the industry is providing – young people; people with disabilities and medical problems cannabis might be able to help with; and their caregivers and families are flocking to Colorado and Washington – soon Oregon and other states may feel similar influxes of people.
The housing markets in Colorado are already saturated with renters who are unable to find housing in the California dot-com-reminiscent rental markets; in Denver, a standard one-bedroom apartment is renting for $1000 – $3500 depending on the amenities and location. For many families, a one-bedroom is out of the questions, and for students, rent this high is exorbitant and out of their financial reach.
Real estate companies in Colorado and Washington are doing quite well, riding the wave of cannabis industry success, and real estate construction companies are throwing up apartment homes and new housing developments as fast as they can.
Colorado as a case study
As of April of 2015, Colorado home prices were rising at the fastest rate in the entire nation, according to Svaldi of The Denver Post. In Washington, renters and buyers are having the same problems as those in Colorado; Clabaugh noted that housing prices in Washington reached near peak 2007 prices in 2015. Home sales increased 9.4 percent above 2014 numbers, and depleted inventory is currently making it difficult to find property.
The former chairman of the Multiple Listing Service (MLS) board stated that open house traffic in the state of Washington is “simply overwhelming” and “battle royales on the premises” might happen at any time as people attempt to acquire housing in the area. According to the listings this month, there has been a 28 percent drop in availability, including a 36 percent drop in condo availability which may be due in part to the recreational and medical cannabis industry in the area.
The incredible revenue generated by the cannabis industry is having another effect on United States national policy which should make many pro-cannabis supporters very happy: a recent Gallup poll showed that 58 percent of Americans supported legal cannabis for adult use, and 81 percent supported it for medical use.
Our country is changing rapidly, and the view of cannabis has finally become more positive than negative; not just in Colorado and Washington and traditionally liberal states, but throughout the American population.
Twelve states remain which have no marijuana laws at all (meaning the federal laws which classify marijuana possession and sale as a restricted, addictive substance are still in effect and regulate all marijuana in those states), among them Idaho, Wyoming, Nebraska, and Louisiana; this means that 85 percent of Americans live in a state that allows some form of legal cannabis use, be it medical, recreational, or both.
Other states move to legalize it
Arizona, California, Nevada, Massachusetts, Maine, Rhode Island, Florida, and Vermont will vote to allow adult use in 2016 – Vermont will likely be the first to legalize cannabis through the traditional Legislature’s avenues. A major market for marijuana is of course the medical industry, but research progress is slow, due in part to federal laws and regulations which continue to plague researchers across the country.
David W. Murray, a Senior Fellow at a topic and policy research company called the Hudson Institute, argues that“false positives” and “science by press release” is not scientific evidence for proving the case for medical marijuana.
Although the results for many people are hard to argue with, the science will not be genuinely valuable in the eyes of the federal government until there is hard scientific proof of cannabis’ benefits for different diseases and ailments through traditional scientific study. The increasingly positive revenue and approval ratings across the nation may help sway the feds in their conservative view of cannabis and its derivatives, however.
Consider the case of Dr. Sue Sisley, the University of Arizona assistant professor who allegedly lost her position at the university over her intent to conduct cannabis research. Calhoun reported that, as of March 2015, Sisley was “still having trouble getting her ground-breaking work on the effects of cannabis on veterans with Post-traumatic Stress Syndrome (PTSD) recognized in Arizona”).
In Arizona, the marijuana laws remain very tough – possession for personal use of less than 2 pounds of marijuana is a class 6 felony, according to NORML. This felony carries a minimum four-month sentence and maximum two-year sentence, a minimum $1000 fine and 24 hours of community service, for instance.
Sisley’s research has lost three state contracts over the summer of 2015, but she hopes to receive more grant funds from states where marijuana is legal, like Colorado. Colorado has already granted the researcher $2 million in 2015. Americans for Safe Access has named her Researcher of the Year at the National Medical Cannabis Unity Conference held in Washington, D.C.; the veterans whom Sisley has aided appeared on stage with her to accept the award.
It should be noted that Sisley is not only a medical researcher, but an actual physician who specializes in psychiatry and internal medicine – her study on whole-plant marijuana use to help treatment-resistant PTSD in combat veterans has been approved by the Food and Drug Administration (FDA).
Her work has been extremely promising, and supporters believe her job loss and loss of grant offers is a political move designed to stop her investigation into cannabis-based PTSD treatments – which could result in fewer prescription pharmaceuticals being prescribed to PTSD patients and thus a loss for big pharma overall. Johns Hopkins, the famous medical research university in Baltimore, Maryland, offered Sisley a “formal partnership for the study,” and Colorado’s Medical Marijuana Scientific Advisory Council also supports Sisley’s ongoing research.
Sisley’s case is a fantastic example of the possibilities that exist in both medicine and science for breakthroughs in healthcare with the new cannabis economy and industry. Sisley and her supporters believe that federal laws are preventing the onward march of scientific discovery and medical research in the case of cannabis.
According to Arcview, the DEA decreased the regulatory requirements of the Controlled Substances Act (CSA) for FDA-approved clinical trials on cannabidiol (CBD) as quietly as they could. This is a step in the right direction, and it will drive more revenue, research, and medical industry involvement in the cannabis industry.
Cannabis is a revenue generator
In addition to the possibilities of the medical and scientific fields, the cannabis industry in states where the plant has been legalized has created immense amounts of revenue for those states; it is particularly measurable in Colorado and Washington. Let’s take a look at where all this cannabis revenue is going. Arcview Research estimated that Washington state will receive $636 million in revenue from the adult use cannabis market, while Colorado collected $13.2 million just in taxes and fees for the month of August, 2015.
Colorado’s tax revenues were at the single highest levels per month since inception of adult sales in January of 2014. In Colorado, there are three state tax types, according to Ricardo Baca of The Cannabist: standard 2.9 percent sales tax, 10 percent special marijuana sales tax; and 15 percent excise tax on wholesale marijuana transfers – the excise tax goes to school construction projects, measuring in at $31.4 billion plus in 2015 alone.
As of November 2015, the revenues from medial and retail marijuana taxes in Colorado topped $5 million dollars. Portions of this revenue are distributed directly to local governments, to the tune of $740,305 per month when last reported in November of 2015.
You may recall that voters in Colorado rejected the marijuana tax refunds they were promised when voting on legalization; Proposition BB passed with 69 percent support the same month, allowing $40 million to go to school construction; $12 million to youth and substance abuse programs, and $14.1 million to “discretionary accounts controlled by lawmakers” – in other words, lawmakers will use their discretion, trusted by Coloradans, to distribute the remaining funds in responsible ways.
In Washington state, Smith reported that marijuana sales tax revenue is expected to hit $1 billion dollars in the next four years, as estimated by the Office of Financial Management’s forecast. The state of Washington collected $67.5 million from marijuana-related taxes, all of which contributed to its general funding and healthcare services. Since 2015, the income generated by the marijuana industry in the state has increase by $100 million and in 2016, Washington should see around $154.6 million in 2016, according to Bloomberg.
In a mere three months, $37.6 million has been collected; the Washington State executive director and chief economist Steve Lerch predicted that revenues may exceed $369 million by 2019. Initially, Washington and Colorado were the only states in which recreational use of cannabis is legal, as well as possession and sale. Alaska, Oregon, and Washington D.C. legalized recreational marijuana in 2014, as well.
According to the Marijuana Business Factbook, 2014 saw legal marijuana sales revenues reach $2 billion, and they are expected to surpass $3.1 billion in 2015. Unfortunately for marijuana businesses in Washington state, federal tax deductions for small businesses were inaccessible for most due to federal laws which still prohibit the sale, use, and possession of marijuana; these laws will have to be overturned or restructured in the future to encourage marijuana business growth and revenues for the state.
Overall, the cannabis industry is still booming, carrying Washington, Colorado, Alaska, Washington, D. C., and Oregon economies along on a flood of revenue and change which promises to continue flowing into the future as the industry gains momentum and stability through increasing regulation and positive returns. The United States economy is sure to follow; it’s only a matter of time many other states allow legal cannabis use for consenting adults in the same manner as alcohol use, sale, and possession is allowed.
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