The Impact of Marijuana Legalization

This week’s election results brought marijuana legalization up to 24 states.

In a recent paper, the Kansas City Fed told us whether it was a good decision.

Marijuana Legalization

Saying yes, Ohio voted to legalize recreational marijuana. However, it’s not a sure thing because the initiative that voters approved was not a constitutional amendment. It is possible that the state legislature could amend or even reverse the vote.

Still, below, Ohio is dark green. As for the gray states, we can differentiate them. While marijuana is fully illegal in Kansas, South Carolina, Idaho, and Wyoming, seven other gray states permit non-or low psychoactive products:

Although federally marijuana remains a Schedule One substance, a majority of us (in a Gallup survey of 1009 U.S. adults) say we want it to be legal:

Our Bottom Line: The Impact of Legal Marijuana

In a recent paper, researchers at the Kansas City Federal Reserve considered the economic and social impact of marijuana from 2000 to 2020. On the economic side, looking at tax revenue and jobs, they cited moderate benefits while on the social side, especially among heavy users, they observed an increase in substance use disorders and chronic homelessness.

Tax Revenue

While marijuana legalization increased state tax revenue, its average increase was a moderate 3 percent. Meanwhile, tax revenue from tobacco and alcohol declined:

Employment

At the same time, marijuana businesses created jobs. In addition to retail establishments, workers were hired by growers and edibles producers:

Summary

Below, the Fed’s researchers summarized their results. While it is tough to grasp the technicalities of their computations, do take a look at the categories they observed. In addition, with the blue dots to the right of the red line, they display the elevated impact experienced by early adopters like Colorado and Washington state:

Returning to our title, we can say that marijuana legalization’s social cost tended to be concentrated among heavy users while its moderate economic benefits were widespread.

My sources and more: This Kansas City Fed paper took a look at the impact of marijuana. Meanwhile, Axios had a brief summary.