Cannabis has benefited economic activity in the 10th Federal Reserve District by increasing commercial real-estate demand, creating jobs and generating tax revenue, the Federal Reserve Bank of Kansas City said in an economic bulletin.
However, marijuana legalization has also posed challenges for both the industry and localities including “access to banking services and concerns among some local officials about its effects on public health and safety,” said the economic bulletin by authors Alison Felix and Samantha Shampine.
Currently, cannabis companies are mostly restricted from the U.S. banking system as monitored by the U.S. Federal Reserve because it remains a federally illegal substance.
Charged with monitoring economic activity in its district, the Kansas City Fed studied impacts of legal cannabis, which became more widely spread after Colorado voters approved adult use sales in 2012 and licensed stores started selling cannabis in 2014 in the state.
Since then, the marijuana industry has expanded across the nation and to other states in the 10th district including adult sales in Colorado and New Mexico and medical sales in Missouri and Oklahoma.
The growth is expected for years to come, with Missouri voters deciding in November whether to allow adult use sales. Industry advocates are also collecting signatures for future ballots in Nebraska and Oklahoma.
Between 2014 and 2017, Colorado issued about 38,000 licenses for legal cannabis businesses. During the same period, the cannabis industry accounted for about 13.6% of the total of 280,000 new jobs created in the state, the study said.
Colorado’s cannabis industry generated $423 million from marijuana sales taxes, excise taxes, and licensing fees in 2021, and about $150 million in revenue for Oklahoma, with $50 million in revenue is projected in New Mexico for 2021.
In Colorado, tax revenue accounted for 2.3% of total state tax revenue last year, the study said.
“Although these revenues have benefited 10th district states and earmarked
projects such as education and veteran services, tax revenues from marijuana remain a small share of overall state and local government revenues,” said the bulletin.
Across the U.S., 37 states and the District of Columbia have legalized medical marijuana. Twenty of these states including Washington have also legalized recreational marijuana.
Congress is currently considering a measure called SAFE Banking to open up the financial services industry to legal cannabis companies. Although it’s passed the U.S. House of Representatives several times but not the Senate. However, there’s talk it could possibly pass during the Lame Duck session of Congress this year.
The Kansas City Fed released the study on Thursday and it was initially reported by Marijuana Moment on Tuesday.