Legal Cannabis could add $5 Billion to California Economy, Study says

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And that’s with 29 percent of consumers opting for the black market product, in order to dodge taxes and fees.

LOS ANGELES–Results from a state-sponsored study released last week said legal cannabis sales in California could create a windfall of $5 billion dollars in revenue from cannabis sales, from taxes and fees imposed by the state.

The L.A. Times reported that study results also indicated up to 29 percent of California consumers would continue to purchase cannabis on the black market, in order to avoid paying increased taxes and fees.


The University of California Agricultural Issues Center conducted the study.

The study said as of last November medical marijuana sales in California totaled twenty-five percent of overall market sales, with $2 billion in annual revenue. Illegal sales were estimated at $5.7 billion annually. Presumably, with legal adult-use, many consumers would be attracted to legal vendors by accessibility, convenience, as well as to avoid illegality.

Cannabis tourism also was pointed out as an expected boost to state revenue from the adult-use market. A comparison made by the study’s authors noted tourism related to the California wine industry, with visitors to the state that spend $7.2 billion annually on wine.

“Folks have been visiting California to enjoy the best cannabis in the world for many years,” Hezekiah Allen, executive director of the California Growers Association told the L.A. Times. “It will be hugely beneficial to bring this existing commerce out of the shadows.”

With the passage of Proposition 64 last November, California voters approved legalization of adult-use or recreational cannabis. Opponents of recreational cannabis said black market sales persist in states that have already implemented legalization. According to one opponent, cities in California, like Pasadena and Long Beach, may increasingly prohibit adult-use sales, to discourage cannabis tourism.

Study results come on the heels of City of Los Angeles unveiling draft regulations for cannabis businesses.

“Voters called upon us to prepare our city to enter this brave new world of legal marijuana and these draft regulations are a solid starting point. Our goal is to make recreational marijuana a net positive for consumers, community, business, public safety and city coffers. As the largest city to regulate marijuana, we will be the blueprint for the rest of the nation,” Councilmember Bob Blumenfield said when the draft was released.