Ohio's $260M Economic Boom In First Year Of Legal Cannabis: New Study Predicts Windfall

A new economic analysis found that the benefits of legalizing marijuana in Ohio's Nov. 7 election would far outweigh the costs by at least a quarter-billion dollars a year.

A study by Columbus-based Scioto Analysis used research from states such as Washington and Colorado, where recreational marijuana has been legal for over a decade. 

Read also: Legal Cannabis In Colorado Turns Ten: Still Lots To Learn But Sky Hasn't Fallen, Positive Results Abound

Biggest Benefit: Extra Revenue 

The biggest benefit researchers identified is the extra revenue legal cannabis would produce, with its 10% excise tax on top of Ohio’s normal sales tax. But the report explained that the benefit is not just about the $260 million per year legal cannabis is expected to generate, but how those funds are spent.

“Tax revenue on its own is not a social benefit, but rather a transfer from taxpayers to the public sector that is then used to pay for goods and services purchased by the government,” noted the report. “Thus, benefits are only generated when goods and services purchased by governments have positive spillovers.” 

The positive spillovers, say the researchers, include the 36% of the revenue the legalization initiative has earmarked for the Cannabis Social Equity and Jobs Fund and 25% for a Substance Abuse Addiction Fund. 

The report said that directing revenue to those two funds could be expected to create $820 million worth of benefits for Ohioans each year.

Read also: Ohio’s Potential Cannabis Goldmine: $400M In Annual Tax Revenue And Thousands Of Jobs

Then There Are The Jobs 

“Our models predict that Ohio will add roughly 3,300 new jobs in the first year after legalization,” the report said. “Assuming these jobs are full time and pay matches the average wage across the state of Ohio, this will amount to about $190 million in wage benefits for workers across the state. Since these jobs are likely to include part-time work and may be lower than the average wage across the state, this may represent an upper bound on the value of employment generated by legalization.”

Benefits For Consumers, Decline In Arrest Rates

There also would be benefits for recreational weed users themselves, noted the Ohio Capital Journal. By creating a legitimate recreational market, Issue 2 would allow consumers to pay $98 million a year less for marijuana than they otherwise would be willing to pay.

And if weed is no longer illegal, it stands to reason that there will be fewer arrests. One study in Washington State found that after legalization, weed arrests fell by 87% for adults and by 46% for teens.

“This confirms that for the population that would be allowed to legally use cannabis recreationally, arrests almost completely disappear, but the effect is smaller for the population where it would still be illegal to use cannabis,” according to the Scioto Analysis.

Photo: Shutterstock