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Marijuana Legalization: The Financial Impact

Crumpled 100 dollar bills and coins sit beneath at bud of marijauna.


Marijuana Legalization: The Financial Impact

By Michael S. Rothman

Cannabis has long been considered less harmful and less addictive than other legal substances like alcohol or tobacco. The plant offers a host of valuable medical benefits such as help in treating cancer, HIV, seizures and more. Science Daily has reported that marijuana’s active ingredient (THC) is less toxic than nicotine and a study in the Neurotoxicology and Teratology journal explains that pot use doesn’t actually damage the brain yet cannabis is currently classified as a Schedule 1 (i.e., most dangerous) substance.

Under current federal law, marijuana possession is illegal. But, what would happen if more states elected to transition the illegal substance to a taxable, regulated one? All Americans stand to benefit — and not just health-wise. Here’s a look at why the financial impact is another big reason for states to legalize marijuana:

Preventing Marijuana Possession is Expensive

There’s no denying that cracking down on marijuana possession is costly. The government has to allocate a great deal of resources toward preventing marijuana use — currently $20 billion a year, in fact, which is mostly spent on incarcerating individuals with small amounts of marijuana possession. In states where it is currently illegal to have marijuana, officials must invest significant money, time and resources into putting these citizens behind bars.

Eliminating the Costs of Marijuana Prevention Could Fund Other Projects

If marijuana use were legalized, monies currently dedicated to imprisoning offenders could be allocated elsewhere. Redistributing $20 billion and investing in other industries could mean 363,306 more teachers, 468,241 more firefighters, 390,930 more police officers, 5,668 libraries and over 800,000 fixed potholes on roads all over America. Ultimately, deciding to keep marijuana illegal means denying resources for these other worthy goals.

Taxing Legal Marijuana Could Bring in Billions in Tax Revenue

Not only would legalizing marijuana eliminate the costs accumulated by prosecuting consumers, but being able to tax the legalized substance would mean fresh income for states. Assuming that legalized marijuana would be taxed like alcohol or tobacco, according to a 2010 study from Cato, legalizing marijuana could generate roughly $8.75 billion in annual tax revenue for America. From new jobs to new facilities, the income from taxing marijuana would provide a great deal of potential advantages.

There’s no doubt that making marijuana legal means major financial benefits for the country. That’s why it makes sense for states to begin legalizing marijuana now.

What are your thoughts on the financial side of the industry? Do you think states would benefit from legalizing marijuana?



  1. Martin Heartenberg

    August 15, 2014 at 4:38 am

    Concurred. The actions and measures, and let’s also mention the repercussions, taken to prevent potheads being potheads – are simply in the wrong state. But the discussion has risen to a point, where 75% of people in the debate are providing irrefutable, constructed benefits one after the other in a rapidly ascending pile of all these reasons why pot should be legalised (or if that, better uncontrolled/unregulated in reverence of the feeble, petty list of downsides); and there is still no response from law? The current ways are the old ways, the old ways are the wrong ways, the right ways are in the other lane, to get to the other lane we require movement on a massive level – a great HEAVE from the pot community. The world is always evolving, people; becoming a more efficient version of itself. Sometimes, it doesn’t happen without a push.

  2. Jean Ferguson

    August 12, 2014 at 10:40 pm

    Why should government have any control over cannabis at all? Why is the only option here to agree or disagree with government legalizing cannabis, and going on about the tax boon to government? The government has no right to deny anyone the right to grow nature’s gift in their gardens along with lemon balm, lavender, mint, borage or cilantro. The government does not control our planting of castor oil plants in our gardens, yet the seeds produce one of the deadliest poisons on earth. I’m tired of folks getting excited about yet another way for government to pick our pockets. It’s a healing herb, it should not be controlled, period.

  3. Roman Firsov

    August 6, 2014 at 5:50 am

    Yes, not only the country will be able to win, but each person individually. Even if you just buy shares of a company which makes marijuana for medicine!

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