Could Passing Green Make Green?

Most Americans have taken part in some black market activity such as lawn mowing or babysitting. The buying and selling of marijuana is part of the black market but slowly is transitioning into the United States’ GDP. States such as Colorado and Washington have legalized the sale of medicinal and recreational marijuana, and the sales have a great impact on the economy of those states. Data from the Department of Revenue stated that Colorado retailers sold $386 million of medical marijuana and $313 million for recreational users, which generated $63 million in tax revenue. This money is being taken out of the black market and added to the country’s GDP, which also deprives the criminal market substantially because of competition and a change in the supply and demand for legal vs. illegal marijuana.

colorado revenue

Colorado’s total increase in revenue is likely greater than the data shows because the figures do not include smoking tools and increased tourist spending on hotels and restaurants. If all 50 states legalized marijuana, it is estimated that the country would collect more than $3 billion per year in additional taxes, which would have a small but adequate effect on GDP. Other benefits of the legalization of cannabis include less crime, as shown from the data in the graph, and the wider availability of jobs, especially to people who were previously considered felons for using or distributing marijuana. The decrease in crime could be unrelated to the legalization because the data is not so compelling, and crime rates have dropped nationwide from 2013 to 2014.

Colorado crime

There are also some measurable problems involved with the legalization. This includes transportation of cannabis from states where it is legal to others. The number of Postal Service-mailed packages containing pot intercepted in Colorado increased by 1,280 percent from 2010. Economically, legalizing marijuana will create new jobs, but also many jobs will be terminated due to less expenditures on the drug war. Less money spent on prisons, drug investigations, and ending bureaucratic drug agencies all lead to less government spending, decreasing GDP. Whether the total benefit is greater than the total cost is up for more investigation, but at the end of the day, it is all about whether the country will be economically better off.

-Derek Owen


4 thoughts on “Could Passing Green Make Green?

  1. nrgood17

    I think when you mention that legalizing marijuana will cause less expenditure on the drug war and so reduce government expenditure. This is a worthwhile reduction in government spending. Since the drug war began many decades ago the United States has poured billions with marginal results. Drugs are still prevalent and heroine overdoses have skyrocketed. Legalizing marijuana may give the war on drugs the ability to rethink its strategy and focus on combating “harder” drugs like heroine. Like you said the legalization of marijuana will increase revenue and may reduce the overall number of incarcerations within the United States.

  2. kacoff17

    I think that it is going to be interesting to see the impacts on GDP as marijuana starts to become legal in more states. Like you said there will be more consumption on the drug, which can be taxed if it is legalized. But you also mentioned that there would be less GDP spending on the drug war. It will be interesting to see how much an effect national legalization would have on GDP, but my guess would be a positive one. There would be more consumption spending, but also more jobs created for the drug. Not only that, there would be less people in jail, so they would be able to get jobs, and thus increase the national income. These factors will overcome the potential loss of government spending and raise the GDP.

  3. MattReeves17

    Its interesting to read how great of an impact the legalization of marijuana has placed on Colorado. After generating $63 million in tax revenue over the last year, legal marijuana sales have definitely helped Colorado in a great way. Furthermore, by legalizing marijuana, a large amount of transactions have been taken out of the black market and stimulated the GDP of Colorado. If other states see how legalization has impacted Colorado, they may soon follow, allowing them to save large sums of spending on drug related crime and generate very high tax revenues.

  4. Victor Matheson

    My prediction is that marijuana will be like same sex marriage in that national opinions will change fairly rapidly. When MA passed gay marriage in 2004, once it became quite clear that the state didn’t fall apart, other states were less reluctant to enact same sex marriage themselves. States will observe the experience of CO and WA and move to legalize themselves if things keep going well there. I would guess 25 states will be fully legal within the next 10-15 years.


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