$2.3 Billion In Cannabis Tax Revenue By 2020, Predicts New Report
By Tess Allen
The U.S. cannabis market could generate $2.3 billion in state tax revenue from retail sales by the year 2020, according to New Frontier Data’s newly released annual report on the industry.
This figure was forecasted in the report – titled The Cannabis Industry Annual Report: 2017 Legal Marijuana Outlook – under the assumption that all currently legal states continue their projected growth.
“During this tough economy states are looking for any way to close their budget shortfalls and it appears that cannabis may hold an answer for them,” said New Frontier Data CEO Giadha Aguirre De Carcer in a statement.
“New Frontier Data looked at the potential revenues that could be generated from state cannabis taxes and found that in this year alone, states could raise nearly $750 million and triple that number by 2020. These revenues will have a meaningful impact on state programs and provide governors with much needed breathing room in their budgets.”
The cannabis analytics company estimates that in 2017, states where recreational cannabis use is legal will generate $655 million in taxes on retail sales, of which $559 million will come from cannabis-specific sales. The remaining $96 million will come from state sales taxes applied on all retail sales.
By 2020, tax revenues from cannabis will grow to $1.8 billion, of which $1.4 billion will come from cannabis-specific taxes. When you include medical sales in those numbers, the total comes to $745 million for 2017 and $2.3 billion by 2020.
The report released on March 7 also pinpoints where much of said tax revenue is being infused in certain states. Since recreational use became legal in Colorado in 2014, for example, $256 million of the $367 million raised from sales taxes has gone to a range of programs; most notably, the state has directed $119 million to Colorado’s school construction fund. About $7.2 million has gone toward substance abuse prevention programs, $5.1 million to jail-based services and $900,000 to advanced research studies through the Colorado State University Cannabis Research Institute.
The report also states that by 2020, the legal cannabis industry could potentially create more than 280,000 jobs in states with medical or recreational legislation.
One section of the report details the findings of a national survey conduced by New Frontier Data and Full Circle Research of 1,671 adults between Jan. 12 and 15 of this year.
One particularly illuminating nugget from this survey is that only nine percent of respondents believed cannabis should be illegal. A majority at 55 percent believed it should be legalized, regulated and taxed like cigarettes and alcohol, while one quarter (26 percent) felt it should only be legal for medical use.
Meanwhile, almost two thirds (63 percent) felt that the federal government should legalize cannabis, while a mere 17 percent believed cannabis prohibition enforcement ought to be a priority for the federal government.
Although 86 percent felt cannabis has valid medical uses, many expressed concerns for the drug’s perceived consequences for consumers. Roughly one-third (34 percent) believed cannabis was highly addictive, while about 28 percent believed it was a dangerous drug.
Despite these differences in opinion, the overwhelming majority of respondents said they do not support criminalization of cannabis users, with only 12 percent saying they felt cannabis consumers should be arrested or treated like criminals.