A new economic forecast projects a substantial increase in marijuana’s impact on the American economy this year.
America is always open for business. There has never been a more perfect sentence to describe the quintessential American ideal than this one. More than liberty, democracy or the Bill of Rights, commerce, and the commitment to new and innovative industries is the true defining characteristic of being American.
No new sector captures that spirit better than the young and exciting marijuana industry in the United States. Barely a decade old and only recreationally legal in less than half the states, cannabis is poised to become “king” of the American economy as the 21st century approaches the one-quarter mark.
To demonstrate that potential coronation, a new report from MjBiz Factbook, predicts cannabis sales will generate an exponential impact of over $100 billion on the U.S. economy in 2023, an increase of more than 12% over last year’s total.
The newly released analysis also predicts that the additional spending infusion should exceed $160 billion by 2027, mainly due to the continued expansion of recreational and medical cannabis markets in states like New York, Maryland, Missouri and Kentucky.
The economic impact of a given industry on the broader national economy is not an exact science. However, researchers arrived at the prediction amounts by analyzing similar industries and consulting with economists. Based on their collective analysis, they applied a multiplier factor of 2.8 to projected sales of adult-use and medicinal marijuana to arrive at the estimated values.
Given the young age of the still-growing and maturing cannabis industry, the total impact it may ultimately have on the overall economy could be far more significant than analysts’ predictions. After all, marijuana businesses include a large number of manufacturing, agricultural and retail operators, along with additional ancillary support companies like lighting suppliers and accounting and law firms.
Therefore, the projected total amount for recreational and medical cannabis sales of $34 billion for 2023 is just the starting point for the proper financial punch behind the formidable sector. By adding the economic multiplier to the equation, researchers hope to share a more accurate picture of how truly impactful the cannabis industry is on the larger economic landscape.
Simply put, with every $10 spent by consumers and patients at cannabis retail establishments and dispensaries, an additional $18 will be infused into the economy, with much of it at the local level.
That additional $18 comes mainly from the actual workers in the marijuana industry. Their expenditures on housing, transportation, entertainment and many other needs directly impact the economy at its fundamental levels.
Additionally, the hundreds of millions of dollars collected in state and local taxes from cannabis companies go back into the economy through government funding for infrastructure and schools. Likewise, the real estate sector also receives a large infusion of capital when new cannabis businesses move into a city or current marijuana companies decide to expand operations.
As with most burgeoning new industries, the science of predicting and projecting how much the vast array of marijuana companies will genuinely enhance the American economy is still a very fluid process. However, one undeniable fact is inevitable when evaluating this highly attractive and ever-expanding industry. Marijuana is, indeed, good for American business.