Americas Fastest Growing Industry: Marijuana
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Politics and Activism

Americas Fastest Growing Industry: Marijuana

The economic impact of the growth of legal marijuana markets

Americas Fastest Growing Industry: Marijuana

The recreational use of cannabis has a history that is as filled with as much misinformation as there is about the drug itself. Growth of hemp was encouraged upon the founding of our nation due to it having a high level of profitability to weight and the ease of growing it. It wasn’t called marijuana until around 1910, when Mexicans were fleeing to the US during the Mexican revolution, and many of them smoked it recreationally. In 1932 the marijuana was made illegal through the Uniform States Narcotic Act, after a study found linkage between marijuana usage and criminal behavior of “racially inferior” communities. In 1972 the Shafer Commission recommended the complete decriminalization of marijuana. Instead, since it was an election year, there was increase in the size of drug enforcement agencies, and the rise in mandatory minimum sentences and the beginning of the war on drugs, this increased the prison population, but has never decreased the usage rates in the United States. Once the waves of politicians wanting to look tough on crime calmed down, a few states decriminalized possession, and in 1996 California legalized medical marijuana, which began the march to where we are now. On November 8, 2016, four states voted to legalize recreational marijuana. Growing the total to eight states, most of the new states are hoping to get the process finalized by the beginning of 2017, but the process could wind up like Alaska that had to wait until last month to start sales after it being legal for two years.


Population (Million)

Yearly Marijuana Sales (Millions of USD)

State GDP (Billion USD)

Marijuana Sales Effect On GDP









































*projected based of line of best fit for existing data (y=70.836x+51.939) this was with an R^2 values of 0.1059. It was low do small sample size and the outlier of Colorado. ** Projections for Alaska likely thrown off by the high value of b in the equation y=mx+b. All data is based off 2015 data if available to keep data relatively standardized.

Based on the available data, marijuana legalization accounts for between a .1 to .3 percentage point growths in the GDP at a minimum. This is based solely off sales data not accounting for the growth of the GDP caused by the growth of dispensaries, agribusinesses in the supply chain and the people that work at those businesses. Marijuana sales should hit over 5.2 billion dollars in 2017. It also reduces losses of state funds caused by enforcing marijuana laws. Between 2001 and 2010 there were 8.2 million marijuana arrests. 88 percent of these arrests were exclusively for minor possession. Another consequence is that due to higher patrolling and stops in high crime areas it has a higher effect on African-Americans who are more likely to live in these areas. This is why African-Americans are incarcerated for marijuana at 3.7 times the rate of whites even though they both have the same usage rates. . Study finds that 7.3 percent of all Americans used marijuana last year. This number is up from last year and the year before. States lose $3.5 billion annually by enforcing marijuana laws. This also causes reduced earning potential by preventing these individual from being able to compete in the job market. Less competitive job markets mean less productive societies, and being locked out of the legal job market may push individuals to illicit labor markets. This legalization could also cause similar effects as the 21st amendment which greatly reduced organized crime in the US. Vice News

Brings money out of the informal economy, that is cash transactions between individuals, and into the regular economy. It also takes money away from local criminal organizations and reduces the violence caused by the inability to enforce contract disputes on territory, quality, quantity and price. This money that eventually through leaves the US economy entirely by going to foreign criminal organizations. The legalization greatly depresses the income of these groups, and by decreasing the profits of these illicit enterprises it decreases the draw to individuals considering joining. Mexican cartels make $64.3 billion off of illicit drug sale in the United States. This accounts for 22 percent of Mexican trade with the US or 5 percent of Mexico’s total GDP. So US consumption and drug laws have huge effects on Mexico and the growth of violent criminal corporations. After continued growth of the US legal market for cannabis in 2014 drug seizures in Mexico dropped by 32 percent in volume. In 2015 seizures of weed at the border dropped to the lowest in a decade and the street price of the drugs smuggled declined by 50 percent. these market forces put even greater presser on illicit markets. The smaller these groups are the less capable they are of helping with illegal immigration, and other crimes. Cartels are unable to compete with US legal cannabis markets because of the relative high cost smuggling due to losses of product, highly specialized transport, and high travel distance. It also struggles to compete with U.S. production processes, which grow under highly controlled conditions which results in a higher quality product with a higher THC content which is the chemical responsible for the desired effect of smoking marijuana. If these policies can out-perform current policies while growing local economies we can shrink the 51 billion dollars each year we spend on the war on drugs with minimal results.

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