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Cannabis to add a million jobs, $132 billion tax revenue to US by 2025

FILE PHOTO: Customers shop for
will create almost $132 billion in federal tax revenue by 2025 —
if the federal government legalizes it.

Thomson Reuters

  • A report from New Frontier Data estimates the cannabis
    industry could generate $131.8 billion in federal tax revenue
    and add 1.1 million jobs by 2025 if it’s legalized for adult
    use in all 50 states.
  • If the US were to legalize cannabis federally today, it
    would add 782,000 jobs to the economy, according to the
  • The country could be leaving billions in tax revenue on
    the table if it keeps the status quo patchwork of state laws ,
    rather than coherent federal regulations. 


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

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. 

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

FILE PHOTO: Marijuana plants for sale are displayed at the California Heritage Market in Los Angeles, California July 11, 2014. REUTERS/David McNew
tax windfall?


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.

In other words, the federal government will leave over $75
billion on the table, if it doesn’t legalize the drug, according
to New Frontier. That echoes a report from ArcView Market
Research, which predicts the entire legal cannabis market to

reach $24.5 billion in sales
— representing a 21% growth
rate — by 2021. 

If legalized in all 50 states, cannabis would immediately
add 782,000 jobs to the US economy. That number would increase to
1.1 million by 2025. 

To put that number in
perspective, the Bureau of Labor Statistics projects the total US
labor force to
increase by 10.5 million people
in the next

But Attorney General Jeff Sessions, a noted cannabis
rescinded Obama-era rules
directing the Justice Department to
keep its hands off of state-legal cannabis businesses earlier
this month, which may put the industry’s future in jeopardy. A
growing chorus of lawmakers on both sides of the aisle
blasted Sessions’ move
, though the
cannabis industry was unperturbed

Public opinion seems to be on the cannabis industry’s side. Some
58% of voters said in a Quinnipiac
on Thursday that marijuana should be legal, and 70% of
voters oppose enforcing federal laws in states that have made
marijuana legal. 

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