Marijuana industry expected to add $92 billion to US economy in 2021
From jobs to tax revenue to commercial real estate, the marijuana industry has a large – and growing – impact on the broader economy in the United States.
The total U.S. economic impact from marijuana sales in 2021 is expected to reach $92 billion – up more than 30% from last year – and upwards of $160 billion in 2025, according to analysis from the newly published MJBizFactbook.
To measure the industry’s economic impact, MJBizDaily analyzed similar industries and applied a standard multiplier of 3.5 on projected recreational and medical marijuana retail sales.
The numbers are a best guess because the marijuana industry’s structure is somewhat unique because it encompasses agricultural, manufacturing and retail activity.
The economic impact of the marijuana industry is not the same as supply-chain revenues that are often used to estimate the “total size” of an industry.
Rather, the economic multiplier paints a picture of the impact the industry has on the broader economy.
In this case, for every $1 consumers and patients spend at retail locations, an additional $2.50 will be injected into the economy, much of it at the local level.
That impact comes directly from the day-to-day needs of workers in the cannabis industry, including spending on life’s necessities such as housing, 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, including schools and roads.
In addition, real estate receives a boost from new retail, manufacturing and agricultural businesses moving into an area or established companies expanding, increasing broader demand for commercial properties.
Cultivating and manufacturing marijuana can require large investments in equipment and technology that boost not only the local economy but also areas throughout the U.S.
The list goes on.
Using the same multiplier methodology can also offer insight into the local-dollar impact from sales of recreational and/or medical marijuana.
The economic impact will vary by state based on the size, maturity and type of market.
For example, as the largest market in the U.S., California’s marijuana industry is expected to pump close to $20 billion into the state’s economy in 2021.
No other state comes close to that amount.
But states such as Colorado, Illinois, Oregon and Washington will provide more than $10 billion each for their local economies in the coming years.
Expect the same for markets in densely populated states such as New Jersey and New York as they develop.
If we consider total population, some states benefit more than others.
