The Motley Fool is a multimedia company that offers news and opinion on investment and finance, and as such, it is a member of the business community. It is also safe to say that the business community is not known for being a bunch of hippies. The Motley Fool has nevertheless published an editorial offering five reasons why marijuana should be legalized. This is an unmistakable sign of how far the marijuana legalization movement has come in recent years.
Support for legalization keeps growing
Another sign is that, for the first time, a poll recently showed that a majority of Republicans approve of legalization. While this does not mean that federal legalization will definitely happen soon, it does indicate that the tide has turned. So what are those five reasons?
A new stream of tax revenue
First, legal marijuana generates tax income for governments. The Motley Fool cites studies that offer estimates of how much money the federal government could expect to make if it legalized and taxed marijuana at a 15 percent rate: more than about $10 billion per year. Citing information supplied by New Frontier, a business data firm, Forbes magazine has said that taxes in legal states generated about $655 million in 2017.
In the first three months of 2018 in California, a total of $60.9 million in tax revenue was generated by the state’s legal marijuana industry. Since adult-use legalization in Colorado in 2014, the state has taken in an estimated $1 billion in tax revenue, with $247,368,473 of that amount being raised in 2017. When it comes to the generation of tax income for governments, legal marijuana is already challenging or beating alcohol.
Creating jobs in an emerging industry
Second, federal legalization would create jobs. One source of job creation would be the industry itself, including growers, wholesalers, and retailers. There would also be secondary sources of jobs, including the businesses that help other businesses—consultants, financing, lending, equipment vendors, and so on. The New Frontier report estimates the number of jobs created could top one million.
Increased investment in a thriving market
Third, if marijuana were legal at the federal level, then marijuana stocks and other investment instruments would become legal too, leading to investments that would generate wealth. Currently, the marijuana market is expanding quickly—so quickly, in fact, that some corrections are appearing, for example in the form of product oversupply. But if federal legalization were to occur, the federally regulated market could receive a big boost in investment opportunities.
Stop wasting money on incarceration
Fourth, as long as marijuana is illegal, people will continue to go to jail for growing it or having it, and prisons cost the state money. The federal government estimates that it costs roughly $90 a day, or about $32,000 per year, to house one of its prisoners. There are about 11,000 people serving time in federal prisons on marijuana charges, and about half of them have little or no prior convictions. If marijuana were legal, the federal government could save millions on incarceration. In addition, its law enforcement agencies could direct their money toward other, worthier targets.
Reduced incentive for organized crime
Fifth, with legalization, marijuana prices would go down. While this may not work to the benefit of all, the cheaper a product becomes, the less attractive it is to criminal enterprises. While mobsters still deal in cigarettes with phony tax stamps and counterfeit liquor, for example, legal markets significantly reduce the opportunities for illegal ones.
Finally, here is a reason not mentioned by The Motely Fool: If marijuana is legalized at the federal level, its many medicinal uses will receive due attention from researchers. Medical research could spell relief for millions who currently suffer from conditions that marijuana could alleviate or cure.
While all these reasons have been provided before by marijuana advocates and opponents of the war on drugs, it is noteworthy when a company such as The Motely Fool joins the chorus. Twenty years ago, it did not at all seem likely that the legal marijuana market would be as big as it is now. It does not seem so unlikely now that federal legalization could happen before long.
What do you think? When will the federal government legalize marijuana? Leave a comment below.