Financial Advantages of Cannabis Legalization

Financial Advantages of Cannabis Legalization

As of today, the legalization of cannabis for medical and recreational purposes is still widely debated by different governments. Only Uruguay and Canada fully legalized weed for both uses while other nations are moving forward by recognizing its medical use at a given amount. Meanwhile, Canada won’t legalize 2 popular marijuana products, at the same time the federal law of the United States of America (USA) prohibits all forms and uses of cannabis.  However there are already ten states where you can buy marijuana for recreational use and 33 states utilized it for its medical benefits. Nevertheless, these activities are regulated by their state laws.

On the other note, cannabis prohibition aims to reduce the crimes, accidents and mental illnesses associated to its illicit use and addiction. However as time goes by, this strategy seems to be ineffective. The one that is only thriving is the illegal market of marijuana while the government is burdened on the hunt of criminals and in damage rehabilitation. Hence, many states have considered the legalization of cannabis as a resolution. This movement towards legalizing weed caused expansion of legal cannabis companies and advancement of research on the medical benefits of marijuana. Indeed, there are financial advantages on cannabis legalization and we will discuss more of it as we go along on this article.

Increase Income in Taxes

In 2012, Colorado and Washington DC were the first states that legalize the recreational use of marijuana. Since then, the marijuana tax revenue for Colorado has an increase of 53 million dollars while Washington marked an 82 million dollar tax a year after the legalization. In 2015, cannabis sales of Colorado reached almost 1 billion dollars and a tax of $135 million were collected on medical and recreational marijuana. Meanwhile, in California, which just recently legalized recreational use, the sales reached $2.75 dollars in 2018 which can be attributed to its size and population.

Furthermore, in Colorado, the generated revenue from cannabis excise tax goes to construction projects, operation funds of public schools, farmers’ financial grants and to public health campaigns like marijuana education, youth mentoring, drug abuse and treatment . As the state acknowledges that there are health risks on cannabis legalization, a portion of the tax generated will be allocated to address these negative consequences.

Moreover, according to New Frontier studies, if weed is federally legalize, it can further the country’s tax revenue for up to 131.8 billion dollars by 2025 that can help in boosting USA’s economy .

New Working Places and More Job Opportunities

Just as the taxes generated are increasing and so is the number of jobs upon cannabis legalization. According to McVey (2018), there are already 125,000-160,000 workers on weed industry which is estimated to be three times more than that of U.S. coal laborers. Generally, these jobs are categorized into three: the owner, key employee (eg. store manager and grower) and support employee (eg. seller) and state governments release corresponding licenses for each as for safety and security . It is expected that there would be more job opportunities as more states consider weed legalization.

Currently, California tops on the number of medical marijuana-related job postings, followed by Florida and New York. Furthermore, these medically-related job postings can cater health-care professionals, marketing and sales professionals as well as delivery drivers. Cannabis dispensaries are spreading out across states as marijuana is legally prescribed for pain relief, control of nausea and vomiting among others.

Moreover in California, the study of ICF revealed that there would be an additional of 81,000 jobs with the legalizing of weed for recreational use and it can skyrocket the total labor income by 3.5 billion dollars .

Besides farming, production and sales, there is an increasing demand for indirect employment such as in construction, software development, financing services and many others . As a matter of fact, MJ Freeway, a tracking software marijuana business company, was listed on the INC’s 5000 most rapidly expanding companies last 2015. Truly, marijuana industry creates jobs and opens better opportunities. And if it is federally legalized, it can bring about 1.1 million jobs by 2025 according to New Frontiers .

New Investment Directions

The economic benefits of legalizing weed have been realized in the collected tax revenues and increased employment, as previously discussed. Meanwhile when it comes to stocks investment, cannabis industry is somehow faltering as it remains illegal on the nationwide level. Most of the investors are trading only penny stocks in the over-the-counter markets. With this situation, it would be a lost opportunity for the investors to benefit on its burgeoning growth on US Market .

On the other hand, there are different types of marijuana stocks that are already existing mostly in Canada and have great potential. These are 1) plant touching/ cultivation operations, 2) pharmaceuticals and biotechnology, 3) ancillary businesses (eg. hydroponics, packaging solutions) and 4) marijuana-business related services (eg. real estate, technology). If cannabis is legalized federally, marijuana stocks can be freely listed on US exchanges that can be accessible for more investors .

Money That Can Be Saved

Another financial advantage of cannabis legalization is that it can cut enforcement costs enormously; thereby, saving up money. In 2006, marijuana arrests amounted to 326.36 million dollars in Pennsylvania. If decriminalization is implemented, it would reduce the number of prisoners in the state. On the other hand, federal data showed that the costs can amount up to 3.6 billion dollar annually, according to American Civil Liberties Union 2013 Report. Hence if legalized nationally, this big chunk of expense will decline. Moreover, the removal of cannabis on list of controlled substances will result to lesser court trials and decrease number of imprisonments .

On the other note, medical patients who are using cannabis-based drugs can also take advantage on weed legalization. Legalizing marijuana entails commodifying it that would make it less expensive as before. It may sound unpleasant for many companies but it would be of great help on medicine and research .

Changes in Law Regulation

Currently, marijuana is still a Schedule I illegal substance under federal law however, there are varying state laws that allow its circulation. Moreover, there is a higher possibility that more states would follow the trend of legalization. There were 21 states that filed bills for legalization of adult-use marijuana last 2018. Indeed, majority are in the move as more citizens favor its legalization.

Likewise, decriminalization on certain amounts of weed are already implemented in 22 states plus Washington, DC. Hence, it can only be considered as a violation not a state crime.


Finally, we have discussed the benefits of legalizing weed particularly its financial contribution. These benefits include increased taxes, jobs, investments and savings. However, the existing legislation hinder these potentials. As there are many opponents of cannabis full legalization, it is necessary to note if the benefits mentioned would really outweigh the risks of its implementation.

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