Via ConvergEx's Nicholas Colas,
Believe it or not, there was no change in the number of marijuana users in Colorado between 2014 and 2015 after legalization of the sale of recreational cannabis went into effect. At least that’s what Colorado’s Retail Marijuana Public Advisory Committee reported in their latest research on the effects of marijuana on public health. They also found that calls to poison centers for exposure to marijuana and emergency room visits continue to fall. The State Department of Public Safety also reported that the number of marijuana arrests nearly halved, down by 46% between 2012 and 2014. Moreover, Colorado has one of the lowest unemployment rates in the country, and the legal marijuana industry has certainly helped by adding 18,000 new full-time jobs in 2015 according to the Marijuana Policy Group. Perhaps the most significant benefit to the state is tax receipts, as Colorado received $198.5 million in tax revenue last year from marijuana sales of $1.3 billion.
Bottom line, retail marijuana legalization has had its fair share of pros and cons in Colorado, but it’s not been nearly as bad as critics had forecast.
Note from Nick: Jessica’s note about the legal pot business get a lot of attention and comments from readers and today she looks at the social impact of legalization on the state of Colorado. With other states – most notably California – voting to legalize marijuana, this will become a national issue in coming years. Read on for the details.
We’ve written several notes about the success of legal recreational marijuana businesses in Colorado over the past few years, but our most frequently asked question is: what are the social costs? Many people have heartbreaking stories about the effects drugs have had on their loved ones and with one in five Americans now living in a state where retail cannabis is legal, it’s important to understand the social side of the business as well.
Colorado has a few years of useful data to unpeel the layers given that stores have sold retail marijuana there since January 2014. We put together a list of different angles from which to measure some social ramifications and benefits of legalization. Here’s what we found:
Homelessness
Colorado experienced the third largest increase in the total number of homeless people last year (721 people), following California (4,504) and Washington (1,374). It also had an increase of 231 homeless veterans from 2015 to 2016, marking the largest gain of any state. There were only seven other states with a rise in homeless veterans. HUD link: https://www.hudexchange.info/resources/documents/2016-AHAR-Part-1.pdf
So what’s going on there? The ability for dispensaries to sell recreational marijuana as of January 2014 has certainly entered the debate. A few points:
- Colorado Governor John Hickenlooper spoke about homelessness and the unintended consequences of legalizing marijuana in his annual State of the State address in January 2017: “There’s no question that marijuana and other drugs--in combination with mental illness or other disabling conditions--are essential contributors to chronic homelessness.” He also said “tax revenue from marijuana sales can and should be used to help those who fall through the cracks including hundreds of homeless vets.”
Speech link: https://www.colorado.gov/governor/news/gov-hickenlooper-delivers-annual-...
- In a Denver Post article, spokesman Daniel Warvi for the Department of Veterans Affairs said “a perfect storm” of circumstances is pushing many veterans onto the streets. Veterans are coming to Colorado planning to get a job in the burgeoning legal marijuana industry or because Colorado’s job market is booming… But when they arrive in Colorado, the jobs many of them qualify for don’t pay enough to cover rent, and they learn they must be a Colorado resident for a year before getting a cannabis-related job.”
Here’s the full article, which also includes some vet’s experiences: http://www.denverpost.com/2016/11/18/colorado-spike-homeless-veterans/
- Bottom line, many people moved to Colorado after retail marijuana was legalized, and some may have not had the skills to find a job. Granted there are other factors to consider, such as a low unemployment rate and widespread access to health care. The state’s population grew by 101,000 in 2015, marking the first time it crossed the 100,000 threshold since 2001, for example. In another Denver Post article, state demographer Elizabeth Garner said net migration made up about two-thirds of the gain. Link: http://www.denverpost.com/2015/12/22/colorados-population-jumped-by-1010...
Correlation does not equal causation, of course. With that said, contributing factors in the debate have included homeless people moving to Colorado because they can legally buy marijuana or individuals moving to the state with the hopes of getting a marijuana related job and not finding one in time before they become homeless. Source: https://www.theguardian.com/us-news/2017/feb/27/marijuana-legal-homeless...
Crime and Enforcement
We zeroed in on the “Mile-High City” of Denver since it’s the national epicenter of legal recreational marijuana. Denver’s percentage of statewide marijuana sales was 47% in 2014 and 41% in 2015, and there are more than 1,000 marijuana business licenses outstanding. The city also started tracking marijuana-related crimes reported to the Denver Police Department in 2012. Here are some more stats from their 2016 report:
- The total number of crimes reported to the Denver Police Department that “have a clear connection or relation to marijuana” but don’t “have an incidental relation to marijuana” increased from 256 in 2012 to 270 in 2015 (down from 293 in 2014). Note that it also does not include “violations restricting the possession, sale, and/or cultivation of marijuana.” Marijuana-related crime makes up less than 1% of overall crime in Denver and fell from 0.58% in 2012 to 0.42% in 2015.
- Most marijuana-related crime is simply people breaking into stores to get the drug. There were 191 industry-related crimes in 2012 (0.43% of total crime in Denver) versus 192 in 2015 (0.42%) compared to 65 non-industry crimes in 2012 (0.15%) and 78 in 2015 (0.12%). In 2015, “burglary or attempted burglary accounted for 64% of Marijuana Industry-Related Crime. Larceny (theft) accounted for another 11% of all Marijuana Industry-Related Crime.”
- The report notes the rarity of violent crimes – including homicide, rape, robbery, aggravated assault and arson – related to the licensed marijuana industry. In 2015, there were 8, or “one violent crime related to the marijuana industry for every 1,357 violent crimes overall.”
As for arrests, the Denver PD only started collecting the data in 2014. There was an 11% increase to 1,666 marijuana related arrests from 2014 to 2015, including the unlawful distribution/cultivation/possession of marijuana or a marijuana concentrate, public display or consumption of marijuana, and business license violations.
For crime in Colorado as a whole, the State Department of Public Safety put out a 143-page report last year. They found that the number of marijuana arrests dropped by 46% between 2012 and 2014, and that “marijuana possession arrests, which make up the majority of all marijuana arrests, were nearly cut in half (-47%).” Marijuana accounted for 6% of all arrests in 2012 and 3% in 2014.
Report: http://cdpsdocs.state.co.us/ors/docs/reports/2016-SB13-283-Rpt.pdf
- In terms of driving under the influence of marijuana, DUIDs rose 10% to 73 in Denver during 2015, but “represent a very small portion (2.8%) of overall impaired driving arrests.”
- One last important point from the report: “the implication of a legal commercial market is not that enforcement needs will necessarily decrease.” In fact, “the opposite is true in the short run” as “the black market will not simply vanish” and “people will continue pushing the boundaries and operating outside of the rules.” Criminals still purchase marijuana in bulk from Colorado and sell it across the U.S., for example. Therefore, the “Denver Police Department Marijuana Team’s work around illegal marijuana has increased significantly over the last couple of years.”
To put this in perspective, the Denver Police Department (DPD) crime lab processed 524 pounds of marijuana in 2013. After retail sales went into effect in January 2014, this figure grew to 9,504 pounds in 2014 and 4,738 pounds in 2015. Those numbers don’t even include the DPD’s involvement in other operations when marijuana was processed by the Drug Enforcement Agency. The DPD actually increased the number of officers working on the department’s marijuana team to also monitor home grows to ensure people aren’t developing more plants than is lawful.
Link to report:
https://www.denvergov.org/content/dam/denvergov/Portals/782/documents/An...
Link to graphics: https://www.denvergov.org/content/denvergov/en/denver-marijuana-informat...
Unemployment
Colorado is one of five states with the lowest unemployment rates in the country at 3.0% as of December. This represents a fall from 7.9% in 2012 when it ranked 31st. Of course opportunities working for marijuana-related businesses didn’t make up for the whole decline, but it did help. According to the Marijuana Policy Group in a report published last October:
- The legal marijuana industry in Colorado added over 18,000 new full-time jobs in 2015 and spurred $2.4 billion in economic activity.
- Since it’s a “highly-localized industry” it “generates more local output and employment per dollar spent than almost any Colorado sector” except for government program spending. For example, “each dollar spent on retail marijuana generates $2.40 in state output” compared to $1.88 per dollar for the general retail trade.
Link: http://www.mjpolicygroup.com/pubs/MPG%20Impact%20of%20Marijuana%20on%20C...
On the flip side, even though marijuana is legal on a state level, individuals who use can still fail their employers’ drug tests since it’s illegal on a Federal level. Quest Diagnostics released a report in 2014 that showed the “percentage of positive drug tests among American workers has increased for the first time in more than a decade,” mostly due to marijuana and amphetamines. This followed several years of declines. After recreational marijuana was legalized in Colorado and Washington, marijuana positivity rose by double digits in both states during 2013 compared to a 6.2% increase nationally. The study notes that both states also experienced large increases before legalization so the trend was already underway.
Link: http://newsroom.questdiagnostics.com/2014-09-11-Workforce-Drug-Test-Posi...
- Some employers are removing marijuana from pre-employment drug tests. Sixty-two percent of businesses test for drugs in Colorado compared to 77% in 2014, according to the Mountain States Employers Council. This may be due to the state’s low employment rate rather than friendlier views, however. See here: http://www.denverpost.com/2017/02/03/colorado-business-pot-drug-tests/
Public Health and Marijuana Use
The Retail Marijuana Public Advisory Committee has monitored marijuana and its impact on public health in Colorado over the past few years and just published another expansive report on the topic. Here are some of their key findings:
- Past-month marijuana users: There was no change in past-month marijuana use between 2014 and 2015. Two different Federal surveys showed 13% and 17% of Colorado adults said they use cannabis compared to the national average of 8%. Marijuana use over the past month was highest for males (17%) and individuals aged 18 to 25 (26%).
- Daily marijuana use vs tobacco and alcohol: 6% of adults reported using marijuana daily or near-daily compared to daily or near daily alcohol (22%) and tobacco use (16%).
- Teen use: 21% of Colorado high school students said they had used marijuana in 2015, roughly similar to 20% in 2013 before stores first started selling retail cannabis. It’s also about in line with the national average of about 17% and 22% according to two different surveys.
- Marijuana in Colorado homes with children: 8% of adults with children aged 1 to 14 had “marijuana or marijuana products in or around the home.” In “82% of these homes, marijuana was stored safely, while in 18% it was potentially stored unsafely.” The report also said “it is estimated that approximately 16,000 homes in Colorado had children 1-14 years old with possible exposure to secondhand marijuana smoke or vapor in the home.”
- Hospital visits and poison center calls: Calls to poison centers for exposure to marijuana “appear to be decreasing since 2015, including unintentional exposures in children aged 0-8 years.” Moreover, “the overall rate of emergency department visits with marijuana-related billing codes dropped 27 percent from 2014 to 2015 (2016 data is not available yet).” One point of concern is marijuana edibles, however, as they were “involved in about 40% of marijuana exposure calls to the poison center” and twice as common as calls about smokeable marijuana for children aged 0-8.
Link: https://www.colorado.gov/cdphe/marijuana-health-report
Tax Receipts
Tax revenue from marijuana sales is one of the most significant benefits of legalization for Colorado. The state received $198.5 million in tax revenue last year from marijuana sales of $1.3 billion. The first $40 million each year goes to public school construction projects. The balance includes funding for everything from educational programs about the drug and substance abuse prevention grants to pesticide control and inspection services. This article provides an excellent breakdown for more details: https://www.entrepreneur.com/article/289613