Legalizing marijuana nationwide would create at least $132 billion in tax revenue and more than a million new jobs across the United States in the next decade, according to a new study.
New Frontier Data, a data analytics firm focused on the cannabis industry, forecasts that if legalized on the federal level, the marijuana industry could create an entirely new tax revenue stream for the government, generating millions of dollars in sales tax and payroll deductions.
“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,” said Beau Whitney, a senior economist at New Frontier Data.
The analysis shows that if marijuana were fully legal in all 50 states, it would create at least a combined $131.8 billion in in federal tax revenue between 2017 and 2025. That is based on an estimated 15 percent retail sales tax, payroll tax deductions and business tax revenue.
The federal government would reap $51.7 billion in sales tax from a legal marijuana market between 2017 and 2025, entirely new revenue for a business that remains illegal — and unable to be taxed — federally.
The business tax rate for the study was calculated at 35 percent. The corporate tax rate was lowered to 21 percent in a sweeping tax bill President Donald Trump signed last month.
“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,” said Giadha Aguirre De Carcer, the CEO of New Frontier.
The study also calculates that there would be 782,000 additional jobs nationwide if cannabis were legalized today, a number that would increase to 1.1 million by 2025. That includes workers at all ends of the marijuana supply chain, from farmers to transporters to sellers.
The study estimates that about 25 percent of the marijuana market will continue to be illicit, and will shrink if the legal marketplace is not overly taxed or expensive.
“Consumers want to do things legally in general, but they don’t want to do it at too much of a price,” Whitney said. “If they go to 7-11 to pick up cannabis, they’re willing …read more