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William Payne

March 17, 2015


English 2100; Section 3
Professor Blakelock
The Economics Behind the Legalization of Marijuana
Over the past couple years the legalization of marijuana has become a huge discussion.
With this comes many different angles of whether or not there should be legal weed on the
market. Many people think that the drug is going to a problem. They believe that the drug will
end up making the youth of America start using more dangerous drugs. People also think that
this will lead to higher crime rate through people using it while driving and other things that
could put people in danger. But on the other hand there are people that see the good in legal
weed. The fact that marijuana can help many people in the medical field makes a lot of people
feel like it should be legal. But the medical part, even though a huge part, is not the biggest piece
of the puzzle when states starts thinking about making marijuana legal.
Money drives the entire world. You may not be able to buy happiness but it sure helps
and many people agree with this statement. When the states that have already legalized
marijuana sat down and thought about drug, money was the biggest topic. The plant of marijuana
has always been a huge money maker for the people that have sold it. Over the history of the
drug the plant has become legal and illegal. Obviously right now the drug is illegal in many
places, but in the states like Colorado and Washington marijuana is legal. The state of Colorado
is the newest state to legalize marijuana, and they have learned that the money coming from this
is a blessing and a curse.

Before going into the money part of the plant, the first thing to look at is the history of the
plant and why it is illegal in the first place. The plant was legal in the past. Marijuana has been
traced back to 7000 BC where fabrics have been found that are believe to be from the hemp
plant. But in the recent past more and more laws have been put into place. It is said that the hemp
plant has only been illegal for around 1% of the time of use. So what happened in the past that
made the hemp plant seem so bad that it was finally illegal? In the early 1900s when the
Mexican revolution, many people of Mexican descent poured over the border. When jobs became
scarce many of these people started smoking marijuana to cope with the depression (Guither).
Soon after this laws started arising, these laws stated that marijuana had started becoming illegal.
Also right around this time was the alcohol prohibition. People at this time thought the
government was not able to interfere with the drug and alcohol laws. So out of this came the 10th
amendment, which stated that the government the right to interfere with local affairs (Houser).
This allowed the government to make the plant illegal. There was a man by the name of Harry J.
Anslinger that saw an opportunity for a new government agency, the Bureau of Narcotics. He
sought after many reasons to make the hemp plant illegal and he ended making his case
(Guither). The plant was made illegal in all states on August 2, 1937 (Guither). So with the past
of marijuana being a rocky one, Colorado must have had a good reason to make the plant legal.
With the legalization of marijuana, Colorado found out that the money aspect behind it is
a huge factor. The money that Colorado has made is unbelievable. In the late stages of the 2012,
Colorado passed the law that made marijuana legal. They called this law Amendment 64
(Economic). Within the first 24 hours of the law being passed there were very little shops were
opened where you could purchase marijuana. In spite of there being very little shops, two-dozen,
$1 million dollars of revenues were made. Within the first week profits rose to $5 million dollars,

and within the first three months taxes raised off marijuana sales were $7.3 million
(Economic). The average amount charged when buying an ounce of marijuana is anywhere
from $280-$560, which would lead to these staggering amounts (Economic). Marijuana taxes
brought in $15.3 million just in the first five months of 2014. But if you also add in the taxes
from the medical side of marijuana the taxes raised to $23.6 million (Sullum). With these
numbers the state of Colorado has obviously made a lot of money. More money than they
thought they would actually.
In the months after the legalization the state saw that the demand for hemp was 31%
higher than they ever thought it would be in the first year. The state as a whole was demanding
121.4 tons of the plant, per year (Hickey). Since the amount of demand for the drug was higher
than expected, this means that the amount of money raised was also more than expected. Stated
above an ounce of hemp could go from anywhere between $280 and $560. The tax rate for the
hemp plant is 15% in Colorado (Economic). This was one of the biggest factors that led the
state of Colorado to make the hemp plant legal again. But also the money that is made from the
plant itself is not the only thing that is helping the economy of Colorado.
The legalization of marijuana has opened up many jobs in Colorado. The opening of jobs
means there are more people making money, and the more people making money helps the
economy. As long as people spend the money they make the economy will benefit from the new
jobs. 9641 employee badges were given out just a short time after the hemp plant became legal,
which means hemp brought Colorado almost 10,000 new jobs (Yokowics). The jobs opened up
many opportunities for people. Colorado has one of the lowest unemployment rates in the U.S. at
6%. The starting rate for someone entering into selling or clipping plants is around $15 an hour
(Sarich). So you can see why the economy could make so much money off of the hemp plant.

Not only can you sell or grow hemp there is also many opportunities in the textile industry also.
But society also is helped by hemp being legalized in another way. Also the option for people
that wanted to start their own business was greatly increased. The legalization of hemp made it
easy for a new market, and with new markets there comes easier entry into that field of business.
But even they have made a lot of money in this sense, they also saved money in another.
Crime rates were thought to go up after hemp was legal to the public. But what happened
was nothing like anyone thought. The crime rate went down 10.1% in the year after the plant was
legalized. With crime rate falling the amount of people in jail falls and the amount of money
spent on things like this falls.
Also a big upside to the legalization of marijuana is the medical side of things. Marijuana
has been used to help people with very dire illnesses, such as glaucoma. So with the legalization
happening in Colorado people can get this form of the plant also. The state does not make as
much revenues off of this type of marijuana as just recreational but it still pulls in a fair share of
money from it. In December of 2014 Colorado pulled in over $700,000 worth of medical
marijuana sales. This was not as much as the over $800,000 in recreational marijuana, but it is
still a massive number. The state of Colorado this year alone has pulled in almost $1 million in
sales from medical marijuana alone (Colorado). With this amount of money the state of Colorado
seems to be doing very well.
So all of the above things have made the thought of making marijuana legal a great idea
right? Well Colorado has found out that making more money than they thought actually was a
bad thing. The state of Colorado has a huge tax problem on their hands. In the year of 2015 they
may have to take some of the tax revenues from the state itself and pay the residents with that
money. The states constitution has a set number that if the state makes more than that amount

then they have to give more taxes back to the people. In 2014 Colorado made more than the set
number. Which means, Coloradans may each get their own cut of the $50 million in recreational
pot taxes collected in the first year of legal weed, and this has democrats and republicans
finally agreeing on a tax issue (Wyatt). In an article Mrs. Phillips wrote, Voters approved a law
last year that the first $40 million in collected special excised taxes must go towards building
schools (Phillips). But where does the rest of the money go? The state government is trying to
figure this out. The options are to put the money back in the pockets of the tax payers, or many
people are trying to get the money to go to programs that could keep kids away from using
marijuana. The state of Colorado has put in place many programs such as, keep youths away
from drugs, substance abuse treatment, and my favorite, the anti-stoned-driving campaign
(Phillips). Each one of these could take the tax moneys and use them for a good cause. But
with Colorado, their constitution says before they can do anything with the extra money from
taxes they have to send whatever they want to do to a vote for the entire state to vote on.
Before the legalization of marijuana the state was not worried about the tax situation
because everyone was in agreement with the laws. But with the rising tax revenues, the state
government wants to see the money go to more statewide things, like schools and programs that
keeps youth away from drugs (Phillips). The people obviously want the taxes to come back to all
of the tax payers in the state. But if the taxes go back to the people then who should the money
really go to? The government is thinking of maybe just giving the money back to the people who
bought marijuana, or to all of the tax payers. But as stated before, there will be no verdict until
the law goes through the voters. Which makes the problems for the state more stressful.
So overall the economy of Colorado seems to be doing very well since 2012. They took
many of the flaws in the old marijuana laws and made a huge gain from it. The state has made

more than enough money to show other states that the legalization of marijuana is a great thing
on the economic side. Or maybe they are more of a test dummy of sorts for other states. Millions
of dollars was made for the state in the first couple of months, and over the next couple years
millions more were made. The medical field helps out just as much as the recreation sales, and it
helps many people with problems. The state has also helped out many people with the job search
also. Almost 10,000 jobs were created very quickly and many more are being created every day.
Also with all of this came a smaller crime rate. People never thought that the crime rate would
fall after this, but it did. But with all the money that Colorado made just last year has made a
huge problem for the state government. The state of Colorado has made an enormous amount of
money when it comes to the hemp plant and will make more and more money in the future. With
all the money that Colorado is making, they will have to find out what to do with tax revenues.
The state has come up with many different ideas, but the state still has to figure out what they
really want to do with this extra money. The voters will also have a say when they take the polls
at the end of the year. With the money they have already made, it seems like they may need to
change the laws of their economic system a couple times, because the plant is only getting more
and more popular as time goes on. Even though the problems with making too much money
the state looked at the old laws and remade them to where they were able to tax the plant, and
this has brought more money into the state than ever before.

Works Cited
"Economic Impacts of Colorados State-Legal Marijuana Industry."
<i>Squarespace.com</i>. 1 Jan. 2014. Web.
http://static1.squarespace.com/static/5254a88ae4b0b0663269e2eb/t/538f38
18e4b07de501c097ba/1401894936611/Colorado.pdf&gt;.
Guither, Pete. "Why Is Marijuana Illegal?" Drugwarrant.com. 1 Jan. 2015. Web.
http://www.drugwarrant.com/articles/why-is-marijuana-illegal/
Houser, Kimberly A., and Rosacker Robert E. "High Times: A History Of Marijuana
Laws In The United States." International Journal Of Business & Public
Administration 11.2 (2014): 131-141. Business Source Complete. Web. 25
Feb. 2015.
Phillips, Kelly. "It's No Toke: Colorado Pulls In Millions In Marijuana Tax Revenue."
Forbes.com. 11 Mar. 2014. Web.
http://www.forbes.com/sites/kellyphillipserb/2012/04/20/stirring-the-pot-couldlegalizing-marijuana-save-the-economy/
"Rocky Mountain Highlights." Mother Jones 40.1 (2015): 6-7. Academic Search
Complete. Web. 25 Feb. 2015.
Sullum, Jacob. "How Is Marijuana Legalization Going?" Forbes.com. 10 July 2014.
Web. http://www.forbes.com/sites/jacobsullum/2014/07/10/how-is-marijuanalegalization-going-so-far-the-price-of-pot-peace-looks-like-a-bargain/2/
Wyatt, Kristen. "Pot Is Making Colorado So Much Money They Literally Have To Give
Some Back To Residents." Hightimes.com. 29 Jan. 2015. Web. 24 Feb. 2015.
http://www.hightimes.com/read/pot-making-colorado-so-much-money-theyliterally-have-give-some-back-residents/

Yakowics, Will. "Proof Is in the Pot: Legal Weed Gives Colorado Business a Boost."
Inc.com. 20 June 2014. Web. http://www.inc.com/will-yakowicz/legalmarijuana-gives-colorado-businesses-a-lift.html

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