Residents of Indiana, one of the few remaining U.S. states with no legal cannabis access, spend an estimated $1.8 billion annually on the drug, according to a recent state-commissioned study.
A quantification of that sizable appetite, coupled with federal marijuana rescheduling, could change Republican Gov. Mike Braun’s stance on cannabis legalization, he told reporters on Tuesday.
“I’m going to do what makes sense,” Braun said, according to the Indiana Capitol Chronicle.
“I’ve said law enforcement will be important. I’ve been talking to them, and now, the amount of traffic that crosses the border, you know, it’s noticeable.”
“So, all of that will be taken into consideration.”
How big is Indiana’s cannabis market?
The $1.8 billion figure illustrates the scale of Indiana’s illicit cannabis market, driven by 1.3 million residents who reported using cannabis in the past year, according to the report.
About one-third are daily or near-daily users.
The report, commissioned by the Richard M. Fairbanks Foundation and conducted by Rand Corp., found that 44% of Indiana residents live within 50 miles of a licensed dispensary in another state, while 96% live within 100 miles.
Illinois, Michigan and Ohio have all launched recreational cannabis markets. Medical cannabis sales in Kentucky began in December.
The report also notes that cannabis use among adults 26 and older has surged over the past decade, even as use among those younger than 18 has declined.
Braun, who has historically opposed recreational legalization while giving support to medical cannabis, hinted that evolving federal policies and the economic realities of cannabis spending could influence state action.
“I think the fact that the feds made that move, that makes it more likely,” Braun told The Indiana Lawyer.
How much could cannabis legalization add to Indiana’s budget?
The study estimates that legalizing adult-use cannabis could generate about $180 million annually in tax revenue for Indiana – about 1% of the state’s $18 billion general fund.
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But the path to legalization is not without challenges. Startup costs for a regulated market could range from $10 million to $100 million, with ongoing regulatory expenses in the tens of millions annually.
Despite the hurdles, proponents say that legalization could align state policy with public behavior, reduce illicit market activity and keep tax revenue in Indiana.
State Sen. Kyle Walker, a longtime advocate for legalization, called for a “responsible, regulated approach” that protects consumers and ensures Indiana benefits from consumer spending.
“Indiana should take a thoughtful look at cannabis policy, especially as Hoosiers continue spending billions of dollars annually on cannabis products,” Walker said in a statement to Inside Indiana Business.
