Chart: U.S. marijuana industry’s economic impact to approach $70B by 2021

Just Released! Get realistic market forecasts, state-by-state insights and benchmarks with the new 2024 MJBiz Factbook member program, now with quarterly updates. Make informed decisions.

By Eli McVey

The U.S. cannabis industry is poised to inject nearly $70 billion on an annual basis into the American economy by 2021, an eye-popping figure that underscores the broader economic impact for towns and municipalities that accept legal marijuana businesses into their communities.

Estimates published in the newly released Marijuana Business Factbook 2017 show the total economic impact of legal marijuana sales rising from $16 billion-$18 billion in 2016 to $48 billion-$68 billion by 2021 – a 241% increase.

By comparison, the $68 billion figure is similar to the 2016 gross domestic products of the Dominican Republic ($72 billion) and Kenya ($67 billion), according to International Monetary Fund data.

The projections are another example of marijuana’s rapid transformation from an industry dominated by black-market players into a legitimate and considerable economic force, quickly becoming a major job generator and bringing new business opportunities that produce significant ripple effects across the country.

Based on sales of medical and recreational marijuana at the retail level – including flower, infused products and concentrates – the estimates use an economic multiplier of four to quantify the industry’s overall contribution to the economy, showing how revenue generated by cannabis businesses percolates through communities, cities, states and the nation.

In other words, for each dollar spent by marijuana patients/customers at the retail level, an additional $3 in economic benefit is realized – much of it at the local level.

Following are examples of how marijuana businesses affect the economy:

  • Wages paid to employees of cannabis companies benefit many other local businesses, given that workers spend a portion of their earnings to buy food from a grocery store or dine at a restaurant.
  • Marijuana businesses collectively pay hundreds of millions of dollars in state and local taxes, which fund projects including roads and rural hospitals as well as government programs such as education.
  • The launch of a new cannabis business – cultivation facilities, in particular – generate real estate and construction activity, often in economically disadvantaged areas of a town or municipality.

With recreational or medical legalization measures passed in 11 markets last year and several more states that have previously legalized marijuana – including Hawaii and Maryland – set to launch in the coming months, the cannabis industry is poised for strong, continual growth well into the future.

Furthermore, sales in existing medical and recreational markets have shown no signs of slowing. In Washington state and Colorado, for example, adult-use sales in the first two months of 2017 broke records.

Consequently, the cannabis industry’s impact on the broader economy will be even greater as time goes on. That may spur public officials to revisit their stance toward marijuana legalization, given the economic upsides that cannabis businesses can bring to the table.

Eli McVey can be reached at