Cannabis industry forecast to contribute $92 billion to U.S. economy this year

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

New analysis published in the MJBizFactbook indicates that this year’s total U.S. economic impact from cannabis sales is more than 30 percent greater than it was in 2020.

For the entirety of 2021, U.S. cannabis sales revenue is expected to bulk up the economy by $92 billion. What’s more, sales could soar beyond $160 billion in 2025.

The updated analysis brings major hope to the U.S. economy amid a financial crisis spurred on by the coronavirus pandemic. A combination of things that are influencing the broader economy include job creation, commercial real estate and tax revenue.

A number of similar industries were analyzed by the MJBizDaily team, of whom placed a standard multiplier of 3.5 on estimated recreational and medical cannabis retail sales. As an industry that merges activity in the agricultural, manufacturing and retail sectors, MJBizDaily’s projections are merely a guess and are subject to change.

It should be noted that the U.S. cannabis industry’s economic impact is not the same as revenues accrued from the overall supply chain — such revenues are usually assessed to calculate the industry’s total size. Instead, analysts noted that the economic multiplier highlights how the industry is impacting the economy at large.

With this in mind, the analysts have gauged that an extra $2.50 will be funneled into the U.S. economy – mostly at the local level – for every $1 that is spent at retail stores by both consumers and patients.

Economic impact of U.S. cannabis varies by state size, market maturity and industry type 

Divergence between states that have legalized cannabis paints an interesting picture, based on the U.S. cannabis revenue projections recently published in the MJBizFactbook. Analysts noted that the size of a state, the maturity of its market and the type of industry – e.g. medical, recreational or both – majorly influences its potential.

Let’s take California as an example. The state’s well-established cannabis industry is the largest in the nation. So much so, that the amount of cannabis-related revenue expected to be funneled into the economy this year is close to the $20 billion figure. Other well-established states don’t even come close.

Notwithstanding California’s advantage, MJBizDaily data shows that states like Colorado, Illinois, Oregon and Washington will each contribute in excess of $10 billion to their local economies in the foreseeable future. Similar contributions should be expected from heavily populated states like New Jersey and New York, which remain in their early development phase.

Some U.S. states generate more cannabis revenue on a per-capita basis

Total population was considered by MJBizDaily’s reporters. The report claims that certain cannabis-friendly states benefit significantly more than others. While California, as mentioned before, is the most powerful cannabis market in terms of revenue, various other cannabis-friendly states are making a bigger monetary impact on a per capita basis.

Let’s put this into perspective: If predictions are based on the population estimates outlined in the 2020 U.S. census, Nevada will likely generate approximately $1,917 of economic impact per person in 2021.

Conversely, Alaska, Colorado’s and Oregon’s legal cannabis markets will contribute close to $1,500 per person into their respective economies. Meanwhile, the “dollar magnet” State of California will shell out just over $500 of economic impact per person

You can read the full MJBizFactbook report by clicking here.