History of Cannabis Legalization
Cannabis has been used medicinally and recreationally throughout history, yet it wasn’t until the beginning of the 20th century that it became illegal in the United States. In 1996, California became the first state to allow Cannabis for medical use, and since then, many more have joined. In the year 2012, Colorado and Washington became the first states to legalize cannabis for recreational purposes, and since then, many other states have followed suit.
Economic Benefits of Legalizing Cannabis
Legalization of cannabis by a state may open an absolutely new industry, which might gain huge revenue in terms of taxation and job creation. Let’s discuss some of the economic benefits associated with cannabis legalization.
Tax Revenue
One of the biggest economic advantages legalizing cannabis can bring about is in tax revenues. States across the board that legalized cannabis found a massive uptick in revenues from taxes. For instance, in Colorado—one of the states that legalized cannabis in 2012—the state has been able to raise over $1 billion from tax revenues off cannabis sales as of 2021. This money has been used to fund education, infrastructure, and other important programs.
Job Creation
This way, cannabis legalization creates jobs in cultivation, manufacturing, retail, and even in terms of tourism. The cannabis sector has created over 40,000 jobs in Colorado since legalization. The forecast for California is that the industry will employ up to 800,000 people by 2022, after its legalization of recreational cannabis in 2018.
Increased Tourism
Legalization of cannabis has also had quite an impact on tourism. This is because many people are curious about legal cannabis and will travel to states in order to try it where it is legal. It has, therefore, meant increased tourism in the states which have legalized cannabis. For example, cannabis tourism has turned out to be serious business in Colorado, as many people visit just to try out legal cannabis.
The Impact of Cannabis Legalization on Local Economies
Cannabis legalization showed major effects on the local economy, particularly in those areas where such businesses are conducted. Many of the cannabis-related businesses bring new jobs and economic activity to their area, which revitalizes underperforming communities.
Real Estate
Legalization has also affected real estate, especially where businesses relating to cannabis are involved. The more businesses that open in an area, the more demand there is for commercial real estate, bumping property values and rents.
Ancillary Businesses
Cannabis Legalization has also catalyzed the growth of ancillary businesses, including security companies, packaging companies, and marketing firms that provide their services to the cannabis industry and who may also benefit from the economic activity occasioned by Cannabis Legalization.
The Challenges of Cannabis Legalization
While many economic benefits may result from the legalization of cannabis, some challenges exist. Let us look at some of the challenges that states will often face when they make cannabis legal.
Regulatory Challenges
It is, therefore, a great challenge to cannabis legalization to create such a regulatory framework that would cater to both public safety and the industry at the same time. There are issues of rules and regulations at the state level with respect to cultivation, manufacturing, testing, and sales regarding the safety of cannabis products and their high quality.
Social Equity Challenges
Another challenge of legalizing cannabis is how to make sure industry benefits are distributed in an equitable manner. So many communities, especially communities of color, have been hurt tremendously by the war on drugs and cannabis prohibition. States must work to guarantee access for those communities to the economic opportunities that will be opened up through cannabis legalization.
Banking Challenges
Because cannabis is still federally illegal, many banks are leery of doing business with cannabis businesses. This has made it hard for those businesses to gain access to things like banking services, loans, and checking accounts. A number of states have worked to create state-chartered banks able to work with cannabis businesses, but it continues to be hard for the industry as a whole.
Conclusion
Cannabis legalization actually brought much influence and change into the economy of those states in which it has been legalized, with generated tax revenues, jobs created, and tourism increased. While the hurdles of such cannabis legalization require creating a regulatory framework and ensuring social equity, the economic benefits will be clearly perfect. Going forward, as more states consider legalizing cannabis, it will become essential to work out its likely economic impact and develop a framework that will work best in making the benefits maximized and challenges minimized.
