Legally and economically, Colorado and Washington are turning over a new leaf for 2014. A marijuana leaf, that is, which could mean a lot of money flowing into each state’s economy.
With full adult legalization underway since Jan. 1, Steve Berg, editor of “The State of Marijuana Markets Second Edition,” projects sales could reach between $1 million and $800 million in Colorado by the end of the year.
Sales in Washington are projected to reach about $316 million by the end of this year as well.
Although the licensing for medical marijuana dispensaries just began in Illinois, market researchers are comparing the state to Colorado to see if marijuana could be a cash crop for southern Illinois.
“[The] legal marijuana industry is potentially profitable depending on the skill of the business operators and the regulatory environment that are involved,” Berg said.
The price of marijuana has increased in Colorado because of the high demand and the limited supply, he said.
Mike Elliott, executive director of the Medical Marijuana Industry Group, based in Denver, Colo., said the marijuana industry there has created roughly around 10,000 jobs. The people making money off of this industry range from veterans, hired as security for retailers, to construction companies, responsible for building new storefronts.
“In Colorado the first stores opened on Jan. 1 and the first week they experienced $5 million in revenue sales,” said Aaron Smith, executive director of the National Cannabis Industry Association.
Colorado and Washington residents can purchase up to one-forth of an ounce of marijuana from a licensed marijuana retailer for about $100, depending on the quality of the product, Elliott said.
Courtney Smith, owner of Flora Bay Farm in Carbondale, said she would consider growing marijuana if it were legalized for recreational use. In Colorado, there is a licensing process for “cultivations,” which are areas where marijuana can be grown.
However, Smith said her decision would depend upon the regulations put in place after full legalization.
“If we knew we were able to sell cannabis, you know for a profit, then it would be sort of like everything else,” Courtney Smith said. “You would decide if it is worth your time investment.”
Just like cigarettes and alcohol the state could place a hefty tax on recreational marijuana, she said.
Elliott said the marijuana industry has fought to implement tougher regulations and higher taxes.
Colorado currently has a 15 percent tax that the person with the grow license pays. There is an additional 10 percent sales tax on an extra special marijuana on top of the state’s 2.9 percent sales tax and the tax from the city or county where the marijuana is purchased.
In Washington, a three-tier system is in place with a 25 percent sales tax for a grow license, a distributor license and a retail license.
“These businesses can be profitable, but it’s also important to note that they are faced with [an] onerous tax treatment that other businesses do not face,” Berg said.
The overall profitability of these businesses may not be high, but Berg said marijuana businesses generate a significant amount of state tax revenue and create jobs.
Aaron Smith said marijuana is being sold and consumed throughout Illinois regardless of full legalization.
“All we need to do is treat it like alcohol,” Aaron Smith said. “Put it behind the counter in order to replace these black market profits with local businesses that create jobs and contribute to their community through taxes and other means.”