According to an analysis published by MJBizFactbook, the cannabis sector is projected to add approximately $92 billion to the general U.S. economy this year. This figure was arrived at after crunching the numbers on the marijuana taxes and fees, jobs created, demand for real estate, and other knock-on factors.
This projected impact of the cannabis industry would mark an increase of about 30 percent from the total impact of the sector upon the economy in 2020. In 2025, the broader U.S. economy will see a boost of $160 billion from this industry, according to the analysts.
To arrive at the sector’s approximate impact upon the economy, the team at MJBizFactbook measured similar industries before applying a standardized 3.5 multiplier on the anticipated retail sales of recreational as well as medical cannabis. However, these numbers aren’t set in stone since the analysts admit that the cannabis industry is unique given that its influence stretches to the agriculture industry, retail segment, as well as the manufacturing sector.
Under normal circumstances, the total size of a given industry is calculated by computing the total revenues generated during retail sales along every step of the supply chain of that industry. But, such a computation doesn’t paint the entire picture of the cannabis industry’s impact. Instead, a multiplier is used. In this particular case, the analysts believe that each dollar that a patient or recreational user of marijuana spends at a retail outlet translates into an extra $2.5 injected into the local economy.
Those additional dollars added to local economies arise because employees of cannabis firms spend on food, transportation, housing, entertainment as well as other necessities of life. Furthermore, buyers of cannabis products also pay local and state taxes or fees.
This increases the impact of their purchase upon the economy since those tax dollars go to maintaining schools, building infrastructure and meeting other expenses at state or even federal level. This is where the broader U.S. economy benefits, according to the MJBizFactbook team.
The analysts also point out that there will be a variation of the impact based on several factors, such as the kind of cannabis market, the size of that market as well as the maturity of the market.
For instance, California, which is the largest U.S. market of marijuana, is expected to see an injection of a whopping $20 billion into its economy this year. This is in sharp contrast with other states, such as Colorado, Oregon, Illinois and Washington which are estimated to inject approximately $10 billion into their economies from the marijuana industry within a few years from now.
When the sector’s economic impact is looked at on a per capita basis, California doesn’t shine as much since other states deliver a bigger per capita contribution from the marijuana industry.
A case in point cited in the analysis is Nevada whose per capita impact is $1,917 while that of California pales in comparison at $500 and yet the total dollar amount injected into the California economy is huge ($20 billion).
While the overall estimates of the economic impact of legal marijuana programs aren’t very accurate, they provide a general picture of what is happening, and things are looking up!
Those projections of the expected contribution of cannabis to the economy can be brought to life when one looks at how a number of cannabis firms like Gage Growth Corp. (CSE: GAGE) (OTC: GAEGF) (d.b.a. Gage Cannabis) are growing and hiring more and more employees at their different locations.
NOTE TO INVESTORS: The latest news and updates relating to Gage Growth Corp. (CSE: GAGE) (OTC: GAEGF) (d.b.a. Gage Cannabis) are available in the company’s newsroom at https://cnw.fm/GAGE
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