Yes – you read it right – the Cannabis Industry is poised to contribute $90 billion to the US economy in 2021. This is much-welcomed news for the US economy, which suffered a recession in 2020 due to the Covid-19 pandemic and will certainly sure to upset all cannabis critics that said there was no substantiated impact of legalizing cannabis on the United States economy.
According to the newly published MJBizFactBook, the total impact of cannabis sales on the US economy in 2021 will amount to $92 billion. This represents a 30% increase from 2020. In fact, the cannabis industry is expected to contribute $160 billion to the US economy by 2025.
How is the Cannabis Industry’s Contribution to the US Economy Measured?
It is important to note that this $92 billion won’t be revenue from cannabis sales alone. This figure also takes into account the impact of cannabis sales on the larger economy. This includes the number of jobs created, the tax revenue generated, and the commercial real estate revenue for cannabis agriculture and manufacturing.
To calculate the cannabis economic impact, MJBizDaily analyzes all similar industries to the cannabis industry to calculate an average multiplier of the industry’s sales revenue to estimate the impact on the economy.
For the cannabis industry, MJBizDaily developed a standard multiplier of 3.5. In simpler terms, this means that every dollar generated from cannabis sales generates an extra $2.5 for the larger economy. This additional $2.5 could come from tax revenues, jobs created by the industry, and the derivative sectors created.
Unlike other industries, the cannabis industry is hard to assess its impact because it includes agriculture, manufacturing, pharmaceuticals, retail, and the real estate industry.
This $92 billion impact comes directly from the day-to-day needs of full-time and part-time workers in the cannabis industry. This includes spending on necessities like housing, insurance, transportation, entertainment, and more. Marijuana businesses, consumers, and patients also pay hundreds of millions of dollars in state and local taxes that are used to fund state and local government activities like public schools, rehabilitation facilities, and infrastructure.
Furthermore, the real estate industry gets a boost from new retail, manufacturing, and agricultural businesses moving into an area or established companies expanding, which increases the demand for commercial real estate properties.
Which States will Contribute the Most to the US Economy in 2021?
The MJBizFactBook has a chapter on the state-by-state breakdown of the projected economic impact of cannabis. Without question, the state generating the most economic benefit from the cannabis industry is California, with $ 20 billion expected in 2021 alone. In fact, no other state gets even close to these numbers.
However, the other early adopters of the legal recreational and medical cannabis industry are also generating significant economic impact from cannabis sales due to how mature the industry is in these states. States like Colorado, Oregon, and Washington all expect an average economic impact of USD 10 billion in 2021.
This is good news for the cannabis industry and the larger US economy, which is going to need all the help it can get as it recovers from the 2020 recession. It is also suitable for the supporters of the legal cannabis industry to have figures showing the true impact of the cannabis industry on the US economy, which is more than just revenues from medical and recreational cannabis sales.
Cannabis Industry to Contribute $90 Billion to US Economy in 2021
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