November 27, 2012

Potential US Marijuana Market Estimated at $46 Billion

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By Anne Holland

According to the number crunchers at Washington State’s Office of Financial Management, a “fully functioning marijuana market” could result in an in-state total of $1.021 billion gross sales of marijuana grams per year.

Only 2.15% of the US population lives in Washington State. So, extrapolated, this data could indicate that the total US marijuana marketplace could be as big as $46.42 billion per year if cannabis were legalized nationally, including about $1 billion in Colorado, which also legalized cannabis. These figures do not include ancillaries such as hydroponics or paraphernalia, or services to the dispensary industry such as landlords, testing labs, security systems, insurance, advertising, etc.

To put this number in perspective, according to the Economic Research Service of the US Department of Agriculture, as of 2003 US alcoholic beverage sales were an estimated $115 billion. Currently the US legal medical marijuana industry is an estimated $1.7-2 billion in total.

Washington State’s figures were based marijuana consumption patterns from a United Nations Office on Drug and Crime report from 2006. They estimated 363,000 in-state marijuana users consuming slightly more than 85 million grams total per year. For the calculations, the retail price was estimated at $12/gram. Retail price fluctuations — especially due to price wars we’ve reported on in several states with a plethora of competing dispensaries — could make a significant difference in the almost $50 billion total.

These figures also assume all consumed marijuana would be bought at retail, and not homegrown. However, homegrown cannabis also feeds the US economy due to sales of equipment, seeds, fertilizer, utilities, publications, etc.

Washington State’s full fiscal impact report is available online as an eight-page PDF here. It includes useful stats for other states considering making cannabis legal, ranging from increased costs and revenues from DUI enforcement to estimated losses due to ending certain federal grants for drug enforcement.

14 Comments:

Jillian Galloway

November 27th, 2012 at 11:21 pm

We keep hearing about “legalizing marijuana for recreational use”, but what it really appears to be is an attempt to legalize marijuana as a far safer alternative to alcohol.

According to the CDC, alcohol kills 80,000 people every year in the U.S. while marijuana kills none, and marijuana’s addiction potential is about on par with coffee.

Since marijuana is far safer and far less addictive than alcohol, we could GREATLY reduce the amount of harm and addiction in society by giving people the right to switch from the more harmful drug, alcohol, to the less harmful drug, marijuana.
Regina Nelson

November 27th, 2012 at 11:34 pm

I think this is a low estimate of what we will find if marijuana is both fully legalized and medicalized (and there is a difference).

http://www.indiegogo.com/nelsonproject
Adam

December 3rd, 2012 at 11:28 pm

um, you can’t just take a report like that and do a flat extrapolation. The mere fact that washington was one of the first two states to legalize implies that it has a higher weed consumption rate than many other states. the 46 billion is only accurate if the whole country uses marijuana in the same proportion as washington, which I personally doubt.
Brendan

December 4th, 2012 at 12:10 am

@ Adam why do you think those in Washington smoke more than say Texas or Florida ?. Figures can of course be fought over and crunched but it’s The Principle we really need to study and act on now as Globally , Billions has been spent on fighting a war that can never be won, so why not adapt it wide variety of uses back into a functional society , our revolutions are only starting . I’m ripped off every week as in Ireland while there is never any shortage we are still charged almost $20 a gramm ,this has to stop
AJR

December 4th, 2012 at 12:18 am

@Adam, of course you can make such an extrapolation. You’re also making a very big assumption when you assume that there is any correlation between the consumption rate and a legalization vote.

The article explains how the estimates were derived, and lists factors that could be expected to impact the outcome. More importantly, it’s an estimate; no one is claiming that there’s no doubt about the numbers.
Zachary Stickles

December 4th, 2012 at 12:36 am

Actually, Rhode Island has the largest per capita use of Marijuana in the country. Not Washington.
Seth

December 4th, 2012 at 2:15 am

um no adam, that doesn’t imply that washington has a “higher weed consumption rate than many other states” it implies that they have more open support and users, i’m from florida and everybody i know smokes weed but none of their voices are ever heard because of many different reasons from it just not being a priority to fear of how they will look to their peers/family, washington is just lucky enough to have the right people not the right rate.
Brandy

December 4th, 2012 at 2:40 am

Adam, you are in denial if you think that there isn’t just as many people using in other states. I have friends and family in other states that I never realized were using and all for different reasons, pain management, recreational, treatment for nausea, etc. You would be greatly surprised at how many people use and how great of an impact legalization would have on this country, including less drunk drivers, less spousal abuse, and less addiction.
ron

December 4th, 2012 at 3:27 am

Adam you’re fooling yourself. The whole country is smoking just as much weed as they are in washington. You just don’t hear about it because people are afraid of being arrested. This of that number 363,000 people, and thats just an estimate. Its most likely much higher than that. Thats a lot of people. This is happening on a much larger scale across the country.

We are being oppressed as a nation and we are sitting back and taking it. An estimated 46 billion per year being pumped into our economy simply from the manufacture and sale of a plant that grows in the ground. Our own government is oppressing us. Why should we stand for it?
Jacqui Bretan

December 4th, 2012 at 4:34 pm

It’s about time our government gets off its duff & legalize marijuana so the government can tax it & get us out of our deficits & restore the USA to the financial giants its supposed to be.
Sirgabalot

December 4th, 2012 at 5:38 pm

Its a win win … legalization…marijuana would sale more than alcohol…and lots safer!
Theresa Langmaid

December 4th, 2012 at 6:00 pm

I don’t even smoke marijuana but see the need for legalization! It will help the economy, it is far safer than alcohol, it is non addictive but cigarettes are, and if it is home grown in the U.S. is going to put big drop in illegal drug cartels shipping their crap to U.S.
Lory Kohn

December 5th, 2012 at 4:16 pm

There is a lot more than $46 billion in possible cannatax annually in the USA. This report looked carefully at previous estimations, and interviewed Miron and Gettman extensively. It found $67 billion possible in 2010 — and there are more pot-ential revenue streams now: http://cannabis-commerce.com/2010/05/09/cannabis-commerce-in-the-usa/
Al

December 5th, 2012 at 7:09 pm

The next part needs to show the decline of rot gut booze in the states cause once pot out of the closet the only thing that happens is

The nest study needs to show the decline in booze sales once you can buy it,booze sales will drop and Mt Dew sales will rise.