Legalizing marijuana at the federal level could earn the government up to $132 billion in tax revenue and create more than a million new jobs by 2025, cannabis industry analysts predict.
Marijuana is currently legal to varying degrees in 29 states and Washington, D.C., and combined their existing cannabis markets are expected to be worth more than $24 billion by 2025, according to projections published in a new report from New Frontier Data, an industry analytics firm. The plant remains illegal under federal law, however, effectively preventing Uncle Sam from filling his coffers with any weed-related tax revenue despite pot’s potential to make bank.
“The three most common business taxes that any standard business pays to the federal government are federal business taxes, payroll taxes and sales taxes,” said New Frontier CEO Giadha Aguirre De Carcer. “If cannabis businesses were legalized tomorrow and taxed as normal businesses with a standard 35 percent tax rate, cannabis businesses would infuse the U.S. economy with an additional $12.6 billion this year,” she said in a statement.
Combined with projected payroll and sales taxes, New Frontier calculated that the government could earn approximately $131.8 billion in cannabis-related tax revenue by 2025.
“When there are budget deficits and the like, everybody wants to know where is there an additional revenue stream, and one of the most logical places is to go after cannabis and cannabis taxes,” New Frontier senior economist Beau Whitney told The Washington Post.
Marijuana legalization also stands to create roughly 1.1 million jobs during the next decade, including positions encompassing every aspect of the industry from seed to store, according to New Frontier.
California was the first state to legalize medical marijuana in 1996, paving the way for 28 others and D.C. to pass similar laws in the decades since. Colorado first legalized marijuana for recreational purposes in 2012, meanwhile, establishing a trend emulated in the last few years by seven other states and the nation’s capital, notwithstanding federal law prohibiting the plant.
While the Obama administration advised federal prosecutors against pursuing marijuana cases in states where voters passed medical or recreational weed laws, Attorney General Jeff Sessions called those policies “unnecessary” and rescinded them this month effective immediately.
According to analysts, states with medical and recreational marijuana laws on the books each stand to lose millions of dollars worth of annual tax revenue if the Trump administration starts enforcing federal pot laws. Nationwide, existing medical and recreational marijuana sales generated $745 million in tax revenue in 2017, putting them on path to pull in up to $2.3 billion in cannabis taxes by 2020, according to New Frontier.
“These forecasts underscore the important role that cannabis taxes will play in driving new revenue for the government, generating funds to cover the costs of administering the cannabis programs, and supplementing states’ general tax funds,” the report said.
Seventy percent of Americans voters are opposed to the federal government interfering in states with legal weed laws, and 58 percent of voters said the plant should be federally legalized, according to the results of a Quinnipiac University poll published this week.