By Yash Khushalani
Economies around the globe are suffering due to the COVID-19 pandemic. Governments in all nations will be looking for new sources of revenue to provide jobs to millions of people who find themselves out of work and to replenish diminishing budgets.
With this in mind, a potential source of revenue and jobs could be provided through the legalisation of marijuana. Both medical and recreational use of marijuana has been legalised in very few countries across the world, with the legalisation of recreational use being much lower. The only countries that have allowed for recreational use of cannabis in certain states include the United States, Canada, South Africa, Uruguay, Georgia and Australia.
In the United States, the cannabis industry currently employs 250,000 full-time workers – a staggering number considering the industry is banned in nearly 80% of states. With unemployment rates in the United States has reaching record heights during the pandemic and 36 million Americans filing for unemployment benefits to help them get through the crisis, could legalising marijuana help soften the pandemic’s economic blow?
According to studies by Marijuana Business Factbook and New Frontier Data, legalising marijuana all over the US would bring in an estimated $130 billion in tax revenue and 1.6 million new jobs by 2024. To put this in perspective, $130 billion dollars is greater than the 2019 GDP of the state of Nebraska, which sits at $129 billion.
Marijuana Business Daily states that not only is the cannabis industry a job creator and tax revenue generator, it also increases tourism and lowers the use of other drugs. Tourists will often visit states to buy and consume marijuana, while business professionals will travel for market research, conferences and meetings to infuse tourism money into a state.
Additionally, data has revealed that the use of other drugs such as opioids and alcohol has decreased significantly. When cannabis is legalised for recreational or medical use, alcohol consumption can decrease between 15-20%, while the use of opioids can decrease by as much as 33%. You can make the case that you are substituting one drug for another, but studies show that alcohol abuse costs the US over $223 billion every year and around 42,000 people lose their lives due to opioid misuse. This illustrates that the opportunity cost from legalising marijuana transcends the immediate revenue and tax benefits.
The cannabis industry has the potential to transition from being an illicit market to an economic juggernaut. There is the possibility that it could help fast-track economic recovery during this pandemic and prove to be an incredible source of tax revenue for countries across the globe.
Sources: Forbes, Business Insider, thegreenfund, illinoisupdate, mjbizdaily
The authors of this publication are not qualified to provide financial or investment advice and as such the content provided should not be construed in this manner. All information is intended purely for educational purposes and is provided for the personal interest of UNIT members. The opinions expressed within the article do not reflect those of UNIT as an organisation, its partners or its sponsors.