In 2012, Colorado voters passed Amendment 64, making the state one of the first to legalize recreational marijuana. Marijuana for medical purposes was already legal in the state. Today, medical marijuana is legal in 29 states, and recreational marijuana is legal in nine states. Both are legal in Washington, D.C.
Kansas City Fed Vice President, Denver Branch Executive and Economist Alison Felix, along with Associate Economist Sam Chapman, explored the economic effects of Colorado’s marijuana industry. Their findings were published earlier this year.
How much money is being generated by the marijuana industry?
Recreational marijuana stores began operating in Colorado on Jan. 1, 2014. In the first month, recreational sales exceeded $14 million and medical sales were $32.5 million. Since then, recreational sales have grown sharply while medical sales have remained roughly flat. In 2014, total annual recreational sales were $303 million, while medical sales totaled $380 million. By 2017, recreational sales had grown to almost $1.1 billion and medical sales were almost $417 million.
For perspective, personal consumption expenditures on all goods and services totaled $236.3 billion in Colorado in 2016. Total marijuana sales that year were $1.3 billion, or 0.55 percent of all personal consumer expenditures. Meanwhile, the state of Colorado collected more than $247 million in taxes and fees from the marijuana industry in 2017, equating to about 2.3 percent of the state’s general fund revenue for that year.
How has legalized marijuana affected employment?
There is no official count of everyone working in the marijuana industry, but the state provides data on those licensed to work in the sector. All employees working in the industry in Colorado must hold an occupational license issued by the Colorado Marijuana Enforcement Division. As of March 2018, there were more than 38,000 issued individual licenses, including 1,637 business owners. However, not everyone with a license is working in the industry. The Marijuana Policy Group estimates that one active license equates to 0.467 full-time equivalent positions. Using this estimate, the industry employs about 17,800 full-time equivalent workers. As of February 2018, employment in the industry made up 0.7 percent of total Colorado employment, using the formula equating each active license to 0.467 full-time jobs.
What are the costs and challenges?
Because of limited data, the full costs of the marijuana industry in such areas as public safety and health are uncertain. In addition, Colorado’s legalization of marijuana conflicts with federal law, which has created other challenges, including access to payment and banking systems; legal risks for business owners and consumers; and the diversion of marijuana purchased in Colorado to states where marijuana remains illegal.