How will cannabis tourism be affected as more states legalize cannabis?
Marijuana has been illegal in America for the better part of a century, and it all started in 1911, with the need for a prescription for the sale of hemp, followed by the ban of marijuana across Maine, California, Indiana and Wyoming in 1913. After that, the ban of marijuana continued across different states for a period of 20 years. Recently however, the use of recreational marijuana was made legal by Colorado, and not very long after that, several other states followed suit.
The sudden change in laws related to marijuana could be directly related to the economic benefit that the legal sale of marijuana provides, especially when using Colorado and Nevada as examples. However, the legalization of recreational marijuana didn’t start in Colorado, but much earlier than that. This has led to an entirely new industries being formed such as cannabis tourism, medicinal cannabis and a thriving cannabis accessories market. Unfortunately for many states, simply legalizing recreational marijuana won’t lead to the same economic benefits that Colorado and Nevada enjoy.
Timeline of cannabis legalization
In 1973, Texas amended its laws and became the first state to begin the decriminalization process of marijuana, and was soon followed by 12 other states, spanning a 6-year period. This is probably due to the fact that marijuana is the least dangerous substance and was made illegal based on racial reasons. In 1978, New Mexico became the first state to recognize the medicinal value in marijuana, and in 1979, Virginia began allowing doctors to prescribe marijuana for the side effects of chemotherapy and glaucoma.
The first state to legalize medical marijuana was California in 1996, which sparked another series of further decriminalization of recreational marijuana and legalization of medical marijuana. It would be assumed that the legalization of recreational marijuana would soon follow, but this only happened more than a decade later, by Colorado and Washington in 2012. Yet again, this caused another chain reaction of legalizations for recreational marijuana, and by 2020, the consumption of recreational marijuana has been legalized in 15 states.
Which states are benefitting from tourism?
The first state that is benefitting the most from the tourism produced by the legalization of recreational marijuana is Colorado. Statistics show that since 2014, tourism has increased by 51%, and an estimated 6.5 million tourists visited because of cannabis. In 2018, Colorado was able to generate $5.2 billion in sales from marijuana since January 2014, and as of 2020, it has reached annual sales of $1 billion.
The reason for this success is probably due to the fact that they were one of the first to legalize the use of recreational marijuana and as a result, were able to grow the market from the beginning, while other states were still deliberating whether to legalize. The second state to benefit the most is Nevada, with the tax revenue of the state exceeding the expected revenue by 25%, leaving it with a total of $70 million generated.
The success of Nevada is largely due to the fact that it already had a medical marijuana infrastructure in place, with the world’s most high-tech marijuana factory in the world, and 65 dispensaries across the state, as well as a prediction of 130 in the future. In addition to this, Los Vegas receives 42.52 million tourists per year. Weighing all of these factors into consideration, results in $424.9 million in sales for recreational marijuana per year, with the dispensaries estimated to generate $772.3 million in sales by 2022.
Will these states lose out post-legalization by other states?
The big question is; will the states benefitting from the legalization of marijuana, specifically Colorado and Nevada, lose out in any way from the legalization by other states? The assumption is that over time the tourist activity will level out across all states, if all states have legalized.
Unfortunately, it is too early to tell, but current statistics don’t share that assumption. California predicted that the sale of recreation marijuana would generate $1 billion a year, however from the period of 2018-2019, sales generated failed to reach even $333 million.
Reports are showing similar results across other states, such as Massachusetts, where the expectation was $63 million, but half of that amount was not reached. Some of the main reasons for this seem to be an existing black market that is still supply recreational marijuana, and the fact that the demand isn’t easy to calculate. One thing is for certain, the states benefitting the most will continue to benefit for the foreseeable future.