Marijuana Legalization's Impact on the Mile High State

Marijuana Legalization’s Impact on the Mile High State

Munchie industry soars, others not so much, Creighton professor finds

By Ernie Goss, PhD, Jack MacAllister Chair in Regional Economics

Since 2013, when marijuana was legalized in the state, Coloradans have toked up, tuned in and chowed down. Between 2013 and 2017, Colorado has increased employment by 9.2 percent, well above the nation’s 6.4 percent. On the other hand, since 2013, Colorado wages expanded at approximately three percentage points less than that of the U.S.

Two factors contribute to Colorado’s stronger job growth but weaker wage growth. First, Colorado added jobs in lower wage industries. Second, Coloradans cut their average workweek. For the two years following legalization, per capita spending in the low wage food and beverage industry expanded by 3.4 percent for the U.S., but almost double that for Colorado, at 6.7 percent. Additionally, between 2013 and 2017, the average hourly workweek fell by 3.9 percent for Colorado, but climbed by 1.5 percent for the U.S.

To support greater spending on food and beverages with fewer work hours and lower wage growth after the state legalized marijuana, per capita welfare benefits in Colorado climbed by almost 10 percent versus 7.8 percent for the U.S.

But Colorado’s growth in tax revenues from the pot trade from $52.6 million the year after legalization, to $85.3 million in 2015, to $120 million in 2016 is likely to encourage even more states, beyond the current eight, to make recreational use of cannabis lawful even with potentially mixed economic impacts.