Close to $132 billion dollars in tax revenue could be created through cannabis legalization according to a study from New Frontier Data. That’s as long as the Trump administration stays out the kitchen.
Per Business Insider
Marijuana legalization could create $132 billion in federal tax revenue and inject over a million jobs into the US labor market by 2025 if it becomes legal nationwide, a new study says.
The study, from cannabis industry analytics firm New Frontier Data, seeks to estimate the total economic impact of the nascent industry. Cannabis is legal in eight states, including California, which legalized recreational sales on January 1. Vermont is likely to join that list once Gov. Phil Scott signs a bill legalizing the possession of up to one ounce of marijuana into law.Â
The study assumes the tax revenue, which will add $131.8 billion cumulatively to the US Treasury by 2025, will come from a 15% retail tax, payroll tax deductions, and a 35% business tax. Sales tax alone on cannabis would add $51.7 billion to US coffers between 2017 and 2025.
While commercial cannabis markets are up-and-running in eight states, the federal government can’t collect any taxes on the industry since cannabis is considered an illegal, Schedule I drug. That means cannabis would be an entirely new revenue source for the US government.Â
“If cannabis businesses were legalized tomorrow and taxed as normal businesses with a standard 35 percent tax rate, cannabis businesses would infuse the U.S. economy with an additional $12.6 billion this year,” New Frontier’s CEO, Giadha Aguirre De Carcer said in a statement.Â
New Frontier’s estimates rely on a theoretical model where cannabis is legalized in all 50 states, and Congress creates a structure for the federal government to collect taxes on the industry. The difference between that model and the current patchwork of state laws is $76.8 billion in revenue.
Now, this is based off all 50 states saying yes to legalization and of course, the current administration staying as far away.
