California’s legal marijuana market is estimated to be a $5 billion boost to the state’s economy, according to a new state-sponsored economic study.
Voters in the state overwhelmingly approved Proposition 64, a ballot measuring that will legalize and regulate the sales and manufacture of cannabis, in November. California plans to have the program operation in 2018.
Recreational marijuana sales are forecast to bring the state and local municipalities $1 billion in tax revenue and provide more than 1,200 new cannabis-related jobs, according to the report.
The upbeat revenue forecast was dampened slightly by another finding in the study, conducted by the University of California Agricultural Issues Center. Nearly 30 percent of the state’s marijuana consumers may opt to buy in the established black market.
Why? With legalization comes regulation and taxes. The study suggests that illegal marijuana will be popular among those trying to avoid the 15 percent sales tax and other regulatory costs.
“It’s going to take some time,” Lori Ajax, director of the state Bureau of Marijuana Control told the Los Angeles Times. “While it’s unlikely that everyone will come into the regulated market on Day One, we plan to continue working with stakeholders as we move forward to increase participation over time.”
According to the Times:
The analysis estimated that as of November, aggregate annual sales in medical marijuana were $2 billion a year (about 25% of total marijuana sales) and sales in the illegal market were $5.7 billion (75%).
The study also finds that the California medical market, in existence since 1996, will shrink by more than half the current rate.
“Revenues for medical cannabis in Washington State, for instance, fell by one-third in the first year after the legal adult-use cannabis system took effect, and by more subsequently,” the study noted.
A legalized marijuana program will also benefit California’s massive tourism industry, the study said. The Times reports:
Currently, there are more than 260 million visits to California from people from out of state each year, and the visitors spend more than $122 billion in California, much of it on leisure goods and services, the study noted.
For example, tourists have been estimated to spend $7.2 billion a year on wine in California, the report said.
“Given that adult-use cannabis remains illegal in most other states, California’s legalized adult-use industry may attract some new visitors whose primary reason for visiting the state is cannabis tourism, as has been observed in Colorado,” the study said.