Can Marijuana Lift Colorado Out of the Recession?

Posted October 29, 2012 in Marijuana by

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Colorado raked in $5 million in tax revenue in 2011 from medical marijuana businesses, and its cities collected hundreds of thousands more from the budding industry. With Colorado voters poised to legalize marijuana for recreational use this November, their tax coffers could be facing an avalanche of new funds currently being lost to the black market.

But tax revenues aren’t the only potential economic benefit hinging on legal weed. If voters pass Amendment 64, which would legalize marijuana and regulate it like alcohol, the state will save $12 million in criminal and court costs in the first year, according to a report by the Colorado Center on Law & Policy. It would also generate an estimated $24 million in excise tax revenue, all of which will go directly to the construction of new public schools. Those school construction projects are estimated to create 372 new jobs.

The report doesn’t delve into all the additional jobs that would be created within the marijuana market itself. Pioneers staking a claim in the new industry — ganjapreneurs, as they’re called — would reduce unemployment by staffing their marijuana stores and stimulate the economy by hiring contractors and purchasing supplies.

The United Food and Commercial Workers Union (UFCW) Local 7, Colorado’s largest labor union, has endorsed the amendment as an engine for economic growth.

“Removing marijuana from the underground market and regulating it similarly to alcohol will create living-wage jobs and bolster our state and local economies with tens of millions of dollars in new tax revenue and savings,” said UFCW Local 7 President Kim Cordova in a statement. “By taking marijuana off the streets and putting it in retail stores, we can stop steering money toward gangs and drug cartels, and start directing it toward legitimate, job-producing Colorado businesses.”

 

“Marijuana Capital of the Country”

The appeal of new tax revenues and jobs has helped make Amendment 64 a winning proposition; the latest Rasmussen poll puts support for the measure at 61 percent, with only 27 percent opposed. But the amendment’s opponents insist that the costs of legalization will outweigh the benefits.

Denver Mayor Michael Hancock (photo: Jeffrey Beall)

Denver Mayor Michael Hancock, the Denver Metro Chamber of Commerce and other Denver business leaders came out against the measure this month, stating that legalized marijuana will make Colorado less appealing to tourists and businesses considering a move to the state.

“Becoming the marijuana capital of the country will not boost this progress,” Hancock said at a news conference announcing the group’s position. “It will only hurt it.”

Betty Aldworth, Advocacy Director for the Campaign to Regulate Marijuana Like Alcohol, says the state remains popular despite a history of liberalized laws and viewpoints on drugs.

“Colorado has increased its tourism and conventions business since the medical marijuana industry became present in the state,” she said. “It’s entirely possible that people want to schedule their conventions here simply because our streets are safer, cleaner and have a low retail vacancy.”

 

Pot and Productivity

Allen St. Pierre, Executive Director of the National Organization for the Reform of Marijuana Laws, recently debated the issue on the Diane Rehm Show with Mark de Bernardo, Executive Director of the Institute for a Drug-Free Workplace. St. Pierre touted untapped tax revenue as one of the key reasons to support Amendment 64, but de Bernardo argued the economy would lose in the long run.

“If you just look at one aspect of it, which is the cost to state and federal government for rehabilitation and treatment, it’s nine times what the tax revenue would be under optimum circumstances,” he said.

De Bernardo also claimed reports from the Department of Health and Human Services show that illicit drug users are one-third less productive and 3.6 times more likely to injure themselves or someone else in the workplace.

“For nearly 100 years, prohibitionists have been demonizing people who use marijuana in one way or another,” Aldworth said. “They can’t use the same racist rhetoric that was used to justify marijuana prohibition in the 1920s and ’30s, but they’re still using Reefer Madness arguments that are based on stereotypes.”

 

Showdown with the Feds

If polls prove reliable, Colorado will likely serve as the guinea pig for a new era in marijuana policy. But before the experiment can begin, Amendment 64 will have to survive a virtually-guaranteed challenge from the federal government, which is currently waging an aggressive crackdown on medical marijuana dispensaries in Colorado and California.

Colorado Governor John Hickenlooper

It’s not yet known how the federal government will respond if voters approve the amendment, but it has a friend in Colorado Governor John Hickenlooper, who opposes marijuana legalization. And if President Obama is reelected, it’s unlikely he’ll fight to give Colorado the freedom to opt out of marijuana prohibition.

At an online town hall meeting in 2009, Obama seemed to mock marijuana reform advocates when he noted that one of the most popular questions was whether he thought legalizing marijuana would be good for the economy.

“I don’t know what this says about the online audience,” he said, before dismissing the idea.

“The answer is, no, I don’t think that is a good strategy to grow our economy,” he said.

Will you be voting on Amendment 64 next month? Do you think marijuana legalization would be good for the economy? Let us know in the comments section below.

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