Assets: A piece of property owned by a marijuana company that can be taken in order to pay a debt.
Collateral: A piece of property that is given to a bank to ensure your payment for a loan.
Dispensary: A shop where marijuana is sold.
Legalize: To make legal on the state level, not a federal level.
Revenue: Money made due to the marijuana industry.
Schedule One: A group of drugs said to be at a high potential for abuse, no medical significance, and not safe even under medical supervision.
What are the economic changes for the states that have legalized recreational marijuana?
States such as California, Washington, and Colorado have had drastic changes in jobs, job income, and tax due to the legalization of marijuana. For example, the ICF study estimates at least 81,000 additional direct, indirect and induced jobs in California as a result of legalized marijuana sales, according to Meehan, Jeffery, Las Vegas Business Press. Because of the increase in jobs, there is an increase of job income. The ICF also projects an increase in total labor income by at least $3.5 billion. It's not just the money marijuana sales is making for the state but it's also the number of jobs that the new industry is producing. Not only does the marijuana sales benefit a number of people, but it also benefited the the government because of the taxes revenues it projects. Washington and colorado each collected over 150 million dollars in tax revenue due to pot sales in the last year, according to Aaron Smith. The states that are legalizing the “drug” are making a lot of money that goes back into their economy. Even though there are hiccups with in the industry, it doesn't change the fact that they are still making huge amounts of money. Even though marijuana has produced jobs for some people, it has also had a negative affect on others such and police officers.
What impact does marijuana legalization have on the economics of the legal system?
Marijuana affects the legal system by police officer pay, and jailing. “Eighty percent of the adult males arrested for crimes in Sacramento, Calif., last year tested positive for at least one illegal drug. Marijuana was the most commonly detected drug, found in 54 percent of those arrested,” according to Rob Hotakainen, McClatchy Washington Bureau. Because of all of the arrests that are made due to marijuana, the amount in order to keep them locked up goes way up. Ogg said “the county has spent $25 million a year for the past 10 years locking up people for having less than 4 ounces of marijuana.” The money saved by the legal system does not address with the businesses dealing with marijuana.
Why is it hard for marijuana businesses to have a financially successful companies?
The companies are usually forced to deal with cash instead of using banks to put their money in. This happens because the federal government sees marijuana as a Schedule 1 narcotic. Which in turn make the banks nervous that they will be penalized for money laundering or other crimes for getting involved with a business that is still illegal on the federal level. “Because marijuana remains illegal under federal law, most pot shops can’t get bank accounts or accept credit card transactions because the financial services companies fear they would be penalized or shut down by federal regulators for handling money gained from unlawful drug sales,” according to The Times Editorial Board. If a bank is to get caught loaning money for a marijuana company, the government can take the collateral for that loan. “Something people maybe don’t understand is that [the Justice Department] can prosecute, they can seize the assets,” said Jon Skarin of the Massachusetts Bankers Association. If the government seizes your assets, then you have no collateral for the loan and the person can just steal the money. Not only do marijuana businesses have assets seized, but they are robbed more often too.
What are the problems of being apart of a strictly cash industry?
The problems with an industry that only deals with cash is there is a high possibility of robberys and harder to pay employees, taxes, and mortgages. The real problem behind this is, there is no paper trail when you're dealing with cash to pay your utilities and employees. According to Jeremy Berke, “You’re paying your staff in cash, your utility bills, your mortgages, and your taxes. Not being able to handle these transactions electronically is just incredibly difficult.” Even though having to pay all your expenses with cash in a huge inconvenience, the bigger risk when working with all cash, like in the marijuana industry, is you're more likely to be a victim of a robbery. “At a pot shop a thief, posing as a delivery man, pulled a can of bear mace on employees and ransacked their marijuana shop, fleeing in a defensive cloud of "ultra-pepper" spray. Another opened the wall of a dispensary with an ax and attacked the store's safe with a circular saw. Still another stuck to the basics. He kicked in the front door and pointed his gun at the counterman. An accomplice kicked in the back door and filled a duffel bag with more than $10,000 worth of high-quality cannabis,” explained by Tony Dokoupil and Bill Briggs, NBC News. Despite the money loss due to robberies, there is still a large revenue that is given back to the government.
What has legal marijuana given back to the people and government economically?
Marijuana has given the state money because of taxes that are attached to sales and it has produces a steady income for many who didn't have one before. The taxes that are associated with pot sales are put in place by the state where it is sold. When purchasing retail marijuana in Colorado, the purchase is subject to the 2.9% state sales tax plus any local sales taxes and an additional 10% state marijuana sales tax, (Taxes on Marijuana). Each state can add a different taxe on the sale if they decide too. The money from the taxes does not give an income to people, but the jobs that have been produced to grow and sell the weed do produce the income. According to a report from The Seattle Times, bud trimmers can make between $12 and $15 an hour cutting leaves away from the marijuana bud itself. Starting as a trimmer can also lead to other jobs relating to the cultivation of the plant as gardeners or concentrate makers, the Times adds, which carry salaries nearing six figures between $50,000 to $90,000, writes David Eisenberg. People that love weed have a perfect job, that pays well because of legal weed.