Wednesday, November 21, 2018

Recreational Marijuana's Impact on the Mile High Economy: More Jobs, Government, Crime, and Taxes

As of October 2018, 31 states and D.C. have legalized marijuana in some form. Alaska, California, Colorado, D.C., Maine, Massachusetts, Nevada, Oregon, Vermont, and Washington have adopted the most liberal laws for recreational use of marijuana.

To gauge economic impacts, Colorado, the first state to legalize recreational use, represents the best case for analysis. Since 2013, when marijuana was legalized in the state, how has the Colorado economy performed relative to the nation?

Jobs and GDP . Between 2013 and 2018, Colorado experienced a 19.7% boost to inflation-adjusted GDP compared to a much lower 12.1% for the rest of the U.S. On a per capita basis, Colorado expanded inflation-adjusted GDP by 10.8% versus a lower 7.5% for the nation. In terms of job gains for the same period of time, Colorado grew its jobs by 14.7% compared to a much lower 10.0% for the U.S.

The Size of Government . Per 1,000 in population between 2013 and 2018, Colorado added 6.1 state and local government workers, while all other states kept state and local government as a share of the population flat. Had Colorado expanded state and local government at the same pace as the nation, the state would have had 34,204 fewer government employees in 2018.

Crime Rates. Between 2015 and 2016 per 100,000 inhabitants, Colorado reported an increase in violent crimes of 24.2 compared to the nation's 12.5. During this same time period per 100,000 inhabitants, Colorado's robberies climbed by 2.9, while the U.S rate rose by a lower 1.1.

Tax Revenue. Colorado's growth in tax revenues from the pot trade rose from $67.6 million, for the year after legalization, to $247.4 million in 2017. This rapid tax revenue growth has motivated other states to legalize or consider the legalization of the recreational use of marijuana.

This narrow examination of economic data from Colorado suggests a mixed picture of the economic impact of such an expansion.
Ernie Goss

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