Marijuana Is Big Business

MarijuanaWhile more than half of the states allow some form of medical marijuana, the numbers of states that allow “legal” sales of recreational cannabis are still few. However, it is very clear by the surprisingly strong sales in Oregon, the latest state to sanction recreational sales, that marijuana offers states a business that will add a lucrative, big stream of tax revenues. Additionally, domestic pot production in the U.S. for medicinal and recreational use, where “legalized,” is making a dent in the coffers of drug dealers in Mexico.

Oregon sales for January, the first month of recreational pot sales in the state, brought in $3.48 million in taxes, which was more than three times the expected amount. That figure indicates that $14 million in recreational marijuana was sold that month. While a better picture will emerge once the novelty wears off, the sizable amount collected exceeds the revenue projections, which were based on sales in Colorado and Washington, both of which were also sizable. (Oregon charges a 25 percent tax this initial year on pot sales, which is twice Colorado’s rate. Oregon’s rate will drop in the future.)

By some estimates, retail sales of legal marijuana in rose to $4.8 billion in the U.S. last year (prior to Oregon’s sales start) from $3.4 billion the prior year. According to a cannabis industry financial analysis and research firm, sales could reach $25 billion in just a few years based on anticipated legalizations.

As more states eye the tax revenues to be gained versus the expense of charging and even jailing people for marijuana-related crimes, the temptation to join in will grow. Maybe, eventually, the federal government will fall in line and put the matter of legalization for medical use and/or recreational use in the states’ hands. Right now, in spite of more than half of the states having legalized some form of cannabis for use, the transactions and businesses engaged in them are still breaking federal law.

While the Feds might not be happy at states thumbing their noses at them, they are acknowledging the impact the growth of marijuana as a big somewhat-legit business on Mexican drug cartels. Border patrol personnel in the U.S. seized nearly 4 million pounds of Mexican cannabis back in 2009, but a mere 1.5 million pounds in 2014. This shows that growth in the U.S. is creating competition and negating the need to import pot. Additionally, the prices for Mexican marijuana are half of what they used to be. Does it make sense for the federal government to prefer the money for to the cartels versus the states’ coffers – and even the federal ones?

California is the leading source of illicit cannabis cultivation in the U.S. accounting for 60 percent of plants seized in government raids. But production in other states, particularly those that have legalized recreational use, is growing.

As a budding industry (pun intended!), marijuana could become big business, much like tobacco and alcohol in the past. The quasi-legit state, however, needs to be eradicated. Even those who do not condone recreational use acknowledge that the federal government’s lack of movement on medical is strange.

Written and Edited by Dyanne Weiss

Sources:
Portland Tribune: Oregon’s first month of pot taxes exceeds expectations
U.S. News & World Report: How to Invest in Marijuana Legalization
Washington Post: Legal marijuana is finally doing what the drug war couldn’t
AlterNet: 4 Signs the Marijuana Industry Will Keep Growing at a Lightning Pace Across the US
TIME: Oregon Just Made $3.48 Million From Marijuana

Photo courtesy of United States Fish and Wildlife Service

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