The Effects of Cannabis Legalization on the Economy of State Colorado - a Case Study

Abstract

The main objectives of this study were to determine the economic variables which cannabis legalization would alter, and to use case study to examine how cannabis legalization and those variables manifest themselves in Colorado, US.

Cannabis use has a plethora of effects for user’s health, social life, and employment. As recent studies have broadened the understanding of the effects on users, the interest has shifted to the economic implications of different policies. Multiple sources of data were used to gather information about legalization’s effect on overall employment, jobs in marijuana industry, state tax revenues and their allocation, number of business license holders, and changes in state budgets.

In Colorado, cannabis legalization has generated hundreds of millions in tax revenue annually after legalization. Cannabis revenues have been mainly directed to fund schools and education, health care, human services, and local affairs among other things. The number of unemployed decreased in Colorado after legalization of marijuana, and cannabis industry has generated almost 40,000 jobs after 2012. State budgets related to law enforcement and public health and safety were observed to spike after legalization due to need to restructure around new legal framework.