Many have been wondering what the answer to the question is. With simple deductive reasoning, the answer is clearly yes. U.S. states that have legalized marijuana are generating some solid revenue from taxes and fees. There are other benefits to legalization besides just tax revenue generation that the states have seen, such as increased employment as well as increased incentives for private investments. If separate states are seeing their economy advance, why would the country want that on a federal level?

There are many studies that have focused on the impact of the legalization of marijuana to their economy, but there are not many studies that concentrate of the potential economic impact of federal legalization. Most of the economic gains that are discussed at the federal level are seen as what the government could eliminate. Basically, it’s about what the government could save, rather than gain.

The grueling and enduring War on Drugs continue to dig deep into the pockets of the federal government. The U.S spends more than $50 billion, according to the Drug Policy Alliance, each year to enforce its drug laws and imprison drug offenders, with little progress to stop the flow of drugs or reduce drug use throughout the nation.

A new study conducted by New Frontier Data, a research and marketing firm, is looking at what the country stands to gain The study concluded that the federal government would do pretty well if marijuana was taxed as a legal product. New Frontier CEO Giadha Aguirre De Carcer explained, “The three most common business taxes that any standard business pays to the federal government are federal business taxes, payroll taxes and sales tax”.

The study revealed that by combining those three tax bases, the government could generate an estimated $131.8 billion in revenue by 2025. Here’s how.

Payroll Taxes: According to New Frontier, if the country legalized marijuana tomorrow it would create 782,000 jobs basically overnight. By 2025, the firm projects that employment would increase to 1.1 million jobs. More jobs mean more employees on payroll, which means $4 billion in payroll taxes this year, and $5.9 billion by 2025.

Sales Taxes: With an assumed 15 percent sales tax on marijuana products, between 2018 and 2025it would generate an estimated $51.7 billion in new revenue for the U.S. Treasury. Currently, the government only collects business taxes from state-legal business but not marijuana sales.

Business Taxes: Let’s assume that legal marijuana businesses would have the same tax rate as other businesses, 35 percent for 2017, they would hand over an estimated $12.6 billion to the U.S. economy. The study was conducted prior to the U.S corporate tax rate changing to 21 percent. Even with the new reduced tax rate, a nice chunk of change would be going to the economy.

So to answer the question, can federal marijuana legalization boost the economy. Of course it can. Unfortunately, under the Trump administration with Attorney General Sessions, we’re unlikely to see federal legalization in the near future.

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