Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

Dave Warden, a bud tender at Private Organic Therapy (P.O.T.), a non-profit co-operative medical marijuana dispensary, displays various types of marijuana available to patients on October 19, 2009 in Los Angeles, California. (Photo: David McNew/Getty Images)

New Analysis Shows Federal Marijuana Legalization Could Raise $130 Billion, Add 1 Million Jobs by 2025

In addition to putting dent in failed 'War on Drugs,' legalization could put hundreds of thousands of people to work and generate billions in revenue

Jon Queally

Though a key argument for legalizing marijuana in the United States is that it would put a tremendous and necessary dent in the domestic and global failure known as "the War on Drugs," a new analysis out Wednesday reveals that federal legalization could also raise more than $130 billion in tax revenue by 2025 while also creating more than 1.1 million new jobs.

The new study was published by New Frontier Data—a research and marketing firm whose stated mission is to "inform cannabis-related policy and business decisions through rigorous, issue-neutral and comprehensive analysis of the legal cannabis industry."

As the Drug Policy Alliance has shown, the criminalization regime and enforcement of keeping marijuana and others drugs illegal costs the U.S. government more than $50 billion annually—that includes the outrageous costs of imprisoning tens of thousands of people for nonviolent drug offenses.

Meanwhile, according to New Frontier CEO Giadha Aguirre De Carcer,  the government would stand to do very well if marijuana, as has been shown in Washington state and Colorado, was taxed as a legal commodity. "The three most common business taxes that any standard business pays to the federal government are federal business taxes, payroll taxes and sales taxes," De Carcer explained. "If cannabis businesses were legalized tomorrow and taxed as normal businesses with a standard 35% tax rate, cannabis businesses would infuse the U.S. economy with an additional $12.6 billion this year."

As opposed to the current patchwork of states that have legalized either medical marijuana, its recreational use, or both, the analysis looked at what could happen if the U.S. government made it legal to sell marijuana nationwide and included these major findings:

  • If full legalization occurred in all 50 states today, there would be an excess of 782,000 jobs, and would increase to 1.1 million jobs by 2025.
  • Full legalization would result in more legal businesses participating in the market, more consumers participating in the legal market, and more employees on official payrolls, resulting in $4 billion in payroll taxes. By 2025, payroll deductions would increase to $5.9 billion.
  • Assuming a sales tax at the federal level was implemented at 15%, the total tax revenues from 2017–2025 would theoretically be $51.7 billion. This amount of revenue would be entirely new revenue to the U.S. Treasury, as there are currently no federal sales or excise taxes.
  • By combining the business tax revenues, the payroll withholdings based on the theoretical employment required to support the industry, and the 15% retail sales tax, one can calculate the total federal tax revenue potential of legalization: The combined total is estimated to be $131.8 billion.
  • The difference between the current structure and the theoretical model is a $76.8 billion increase in federal tax revenues.

The new data comes in the wake of polling that shows historic levels of support for marijuana legalization nationwide. In October of 2017, a Gallup survey found that 64 percent of Americans now favor legal marijuana—the highest level ever recorded. It's also an issue that receives backing from people across the political spectrum. According to the Gallup poll, a majority of Republicans (51%) are in favor while Independents (67%) and Democrats (72%) support legalization at even higher levels.


Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.

We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.

'Donald Trump Has Finally Run Out of Places to Hide' as House Dems Get Tax Returns

"It's no longer a question of if he's hiding something big," one watchdog group asserted, "it's a question of what he's hiding."

Brett Wilkins ·


Democrats, Progressive Groups Push DOJ to Publish Database of 'Corporate Lawbreaking'

"The Corporate Crime Database Act will bring transparency to the corporate crime crisis so that the DOJ and other law enforcement agencies can better reckon with this greed-driven menace," said one advocate.

Kenny Stancil ·


As Corporations Enjoy Record-High Profits, Experts Urge Congress to 'Rein Them In'

"Today's record corporate profits mirror what we have been hearing on earnings call after earnings call: Corporations are gleefully reporting that their strategy to burden families with unnecessary price hikes is working."

Brett Wilkins ·


'Egregious': PFAS Firefighting Foam Spills at Notorious Red Hill Naval Facility in Hawaii

While officials said there is no evidence that drinking water was contaminated, the incident generated further local frustration with the closing fuel storage complex.

Jessica Corbett ·


House Passes Paid Sick Leave for Railway Workers Despite Opposition of 207 Republicans

"Now let's get it through the Senate," said Rep. Jamaal Bowman, who led the fight to add seven days of paid sick leave to a White House-brokered contract that failed to provide any to railroad workers.

Kenny Stancil ·

Common Dreams Logo