According to a new report by New Frontier Data, titled Cannabis In the U.S. Economy: Jobs, Growth and Tax Revenue, 2018 Edition, the U.S. could generate billions of dollars and a lot of new jobs if they legalize marijuana.
The report, released today, “examines what full adult use legalization of cannabis could generate in federal tax revenue and jobs for the United States economy after implementation of the 2018 Tax Cuts and Jobs Act.” New Frontier Data forecasts that under full federal legalization cannabis has the potential to create cumulatively $105.6 billion in federal tax revenue and 1 million new jobs by 2025.
“New Frontier Data projects increased domestic and international expansion of new legal cannabis markets and $106 billion in tax revenue over an eight-year period in the U.S.,” says New Frontier Data CEO Giadha Aguirre De Carcer.
The report examines three aspects of what full legalization would look like in contrast to the current, state-by-state patchwork of legalized environments, and the anticipated impacts which full nationwide legalization would hold for the U.S. Treasury.
- If full legalization occurred in all 50 states today, there would be an excess of 654,000 jobs, and would increase to 1 million jobs by 2025.
- Full legalization would result in more legal businesses enteringthe market, more consumers participating in the legal market, and more employees on official payrolls, resulting in $3.3 billion in payroll taxes. By 2025, payroll deductions would increase to $5.3 billion.
- Assuming a sales tax at the federal level was implemented at 15%, the total tax revenues from 2017–2025 would theoretically be $46 billion. This amount of revenue would be entirely new revenue to the U.S. Treasury, as there are currently no federal sales or excise taxes.
- By combining the business tax revenues, the payroll withholdings based on the theoretical employment required to support the industry, and the 15% retail sales tax, one can calculate the total federal tax revenue potential of legalization: The combined total is estimated to be $105.6 billion.
- The difference between the current structure and the theoretical model is a $61.6 billion increase in federal tax revenues.