A new report considered the possibility of a fully legalized cannabis market in the United States for the benefits of tax revenues and jobs in the country.
New Frontier Data, a cannabis focussed research firm, released a study on Tuesday (March 13) evaluating the potential benefits of what a fully legal cannabis market could do for federal tax revenue in the US.
“New Frontier Data projects increased domestic and international expansion of new legal cannabis markets and $106 billion in tax revenue over an eight-year period in the U.S.,” New Frontier Data CEO Giadha Aguirre De Carcer said in a statement.
The study projects a $105.6 billion in federal tax revenue benefit for the US by 2025 if marijuana were to be legalized nationwide.
“Lower tax rates may provide cannabis business owners greater capacity to grow and create more jobs,” Aguirre De Carcer said, while the study shows if all states legalized cannabis, it could create close to one million jobs by 2025.
According to New Frontier Data’s assessments, there is a projected difference of 61.6 billion increase in federal tax revenues, compared to the reality in the market.
“Assuming a sales tax at the federal level was implemented at 15 [percent], the total tax revenues from 2017–2025 would theoretically be $46 billion,” a statement from New Frontier Data said. “This amount of revenue would be entirely new revenue to the U.S. Treasury, as there are currently no federal sales or excise taxes.”
Cannabis legalization in the US keeps growing
As it currently stands, the US cannabis industry faces uncertainty regarding the drug’s potential to become legal throughout the country. During the Obama administration, the Cole memorandum became the official defense of the industry. That memo was rescinded in January by Attorney General Jeff Sessions.
Sessions, who was accused of actively fighting the legitimacy of the cannabis industry, has not backed away from his stance against the drug. Famously, the Attorney General said during a Senate drug hearing in April 2016 “good people don’t smoke marijuana.”
Two of the biggest markets for the drug opened recently, with California and Nevada allowing the regulated sale of recreational cannabis in the states as legalization begins taking ahold of several states.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.