Marijuana Legalization Impact on the Economy

Published December 14, 2016

Guest Article by Michael Jacob
Whether you agree with marijuana becoming legal or not, in some states, it already has attained legalized status. Undoubtedly, there has been significant social, economic, and health related impact since legalization in some states. How has the legalization of the drug affected the economy? What ways has it made a positive impact? In what ways has the impact been negative?

The Pro-Marijuana Argument

Gains in Revenue
While some were skeptical about the possible growth in revenue from legalization, Colorado proved a point. The recreational and medicinal marijuana market generated $63 million dollars in tax revenue. Additionally, licensing and fees generated another $13 million for the economy.

Budgetary Savings
It costs money to prosecute someone for possession or sale of marijuana when it is illegal. In a series of reports written by Jeffrey Miron, the estimated savings are evidence for legalization. Miron proposes that governments can save $7.7 billion to $13.7 billion per year. The downside is that revenue from fines and asset forfeiture is lost, but that income is miniscule compared to the savings.

Gains in Productivity
Considering that marijuana is a factor in half of drug arrests made nationwide, the impact of legalization is inherent. 9 of 10 marijuana arrests are for simple possession and not distribution. Legalization can lead to growth of productivity as fewer people are incarcerated and are therefore able to participate in the workforce. Additionally, fewer days are missed by employees having to attend court proceedings and mandatory drug treatment.

Growth of Pot-Friendly Businesses
According to the Marijuana Business Factbook, medical and recreational marijuana sales are booming. Sales were expected to top $3 billion in 2015 alone.  The market for vaporizers, accessories, edibles, and drinkables is booming. In fact, edible weed may be claiming half of the $5.4 billion pot business.

The Cons of Marijuana Legalization

Productivity Losses
Despite evidence indicating that there might be a gain in productivity with the legalization of marijuana, there is also an argument for loss of productivity. Statistics indicate that workplace accidents and absenteeism is higher among employees who smoke marijuana. Of employees who tested positive for marijuana, they had 55% more workplace accidents. Absentee rates were 75% higher than those who tested negative.

Rise of Marijuana-Related Healthcare Costs
Even given the statistic that 10% of all marijuana users will become addicted, this will translate to a rise in healthcare costs related to marijuana. It is expected that admissions to facilities who treat drug dependence will rise from 1.3 million to 4.8 million respectively. Much of this increase will be because marijuana legalization will lower costs of the drug, allowing those who were unable to afford it before access to the drug.

Even non-dependent users are still more likely to suffer accidents, illness, and commit crimes than those who do not use marijuana at all.

Possible Impact on Youth
Legalization of marijuana will increase use of the drug. Young people will be included in the projected increase of people using the drug. It has been scientifically proven that marijuana use in young teens can impair brain development. In addition, the impacts on the ability to problem solve, concentration, motivation, and memory have been proven negative.

Teens who smoke marijuana are more likely to engage in destructive, delinquent behavior than those who do not smoke. It has also been shown that the attainment of education is also negatively impacted in teens who smoke marijuana.

Costs of Implementation
Even with the rise in tax revenues, implementation costs are daunting to legalization. First, taxes must be collected. Before that can happen, there are the budgetary costs of   changing the drug’s status from illegal to legal. In Colorado alone, this translated to a $5.7 million budget shortfall before the first taxes could be collected.

There are varied and deeply thought provoking arguments for and against the legalization of marijuana. Time will tell as more states legalize and begin implementing the new status of the drug whether or not legalization is, indeed, worth the potential economic and societal costs.

Michael Jacobs is a marketing and creative content specialist at with primary focus on customer satisfaction. Technology and fitness combined healthy lifestyle obsession are his main talking points