States Where Pot Is Legal

Pros and Cons

In the United States, marijuana is an illegal Schedule 1 drug. That puts it into the same class as heroin, LSD, and ecstasy, according to the U.S. Drug Enforcement Administration.

The Food and Drug Administration has approved a form of it, Epidiolex, to treat seizures from two rare forms of epilepsy. It has also approved two man-made medicines based on the ingredients in marijuana. The two, dronabinol and nabilone, treat nausea and vomiting from chemotherapy.

There is pressure from many people to reclassify marijuana to a Schedule II drug, such as Ritalin or oxycodone. The DEA has resisted that, but has agreed to support additional research on using marijuana to treat other diseases.

The people in many states grew tired of waiting for federal approval. In 2012, the voters in Colorado and Washington approved recreational use of marijuana. They licensed, regulated, and taxed its sale and distribution. In the following years, other states followed suit. Many only allowed it as a prescribed drug to treat medical conditions. In those states, users must have a doctor’s order to buy it. Some also require an identification card to allow users to possess the drug.

Each state has different laws, regulations, and policies. But they all enjoy the benefits, and suffer from the disadvantages, of making marijuana legal.

States Where Pot Is Legal

Eleven states and the District of Columbia had legalized marijuana for recreational and medical use before the November 2020 election. Here is how much each one earned in tax revenue from marijuana sales.

  1. Alaska — $39.5 million
  2. California — $2.75 billion
  3. Colorado — $1.56 billion
  4. District of Columbia — $17.7 million
  5. Illinois — $91.1 million
  6. Maine — $83.4 million
  7. Massachusetts — $106 million
  8. Michigan — $633 million
  9. Nevada — $102.6 million
  10. Oregon — $777 million
  11. Vermont — $15.9 million
  12. Washington — $1 billion

Four more states—Arizona, Montana, New Jersey, and South Dakota—legalized recreational marijuana use through voter approval of ballot propositions or constitutional amendments in November 2020.

States Where Medical Marijuana Is Legal

Thirty-six states have legalized marijuana for medicinal purposes. Depending on the state, it can be used to treat symptoms of diseases like Alzheimer’s, anorexia, schizophrenia, and cachexia. But research only supports its effectiveness to reduce chronic pain, nausea associated with chemotherapy, and tight muscles from multiple sclerosis. Other research shows it might also help reduce anxiety and inflammation, kill cancer cells, and stimulate appetite.

For example, in Arizona, users can own up to 2.5 ounces of marijuana with written certification from a physician. It can be legally prescribed to treat symptoms of cancer, glaucoma, AIDS, Crohn's disease, and Hepatitis C.

Here are figures for the revenue that some of those states took in from marijuana sales.

  1. Arizona — $406.6 million
  2. Connecticut — $50 million
  3. Delaware — $7.1 million
  4. Florida — $17.4 million
  5. Hawaii — $17.2 million
  6. Minnesota — $9.6 million
  7. Montana — $31.7 million
  8. New Hampshire — $7.2 million
  9. New Jersey — $37.1 million
  10. New Mexico — $54.2 million
  11. New York — $40.9 million
  12. Rhode Island — $60.2 million

Pros and Cons

  • Creates higher revenue for states.

  • Creates jobs in nurseries and dispensaries.

  • Additional costs including regulation, licensing, and administration costs to monitor the sector.

  • Creates public safety and health concerns.

  • Discourages investors because it is still illegal on the federal level.

Legalization of marijuana does create higher revenue for states. But much of the additional revenue generated goes to additional costs. For example, Colorado saw a 2% increase in revenues according to a Federal Reserve study. But it spends 72% of the marijuana sales tax on costs. These include regulation, licensing, and administration costs to monitor the sector. Colorado also spends these funds on law enforcement, substance abuse programs, and health education.

Marijuana legalization also creates public safety and health concerns. After legalization, marijuana usage has increased. As a result, hospitalization related to the drug’s use has also risen. So have calls to poison control mentioning the drug. One reason is that the strength of the active ingredients in marijuana products isn’t regulated. Users can get widely different dosages from batch to batch of brownies or lollipops.

Marijuana has some of the same chemicals as tobacco. It could lead to bronchitis and other lung conditions. The National Institute on Drug Abuse considers marijuana an addictive drug.

In Colorado, marijuana use among those age 18 to 25 more than doubled. It rose from 5% in 2006 to 12% in 2014. A national study reported by the National Bureau of Economic Research found that those between 12 and 20 years old were 5% more likely to try marijuana for the first time. Some studies show it could affect mental development for these young people. Fortunately, it did not increase teenage use of alcohol, cocaine, or heroin.

Nationwide, the number of workers and job applicants who tested positive for marijuana climbed 10% in 2018, to 2.3%.

The NBER report did say that legalized marijuana use increased the likelihood of adult binge drinking by 6% to 9%. The combined use of marijuana and alcohol increased by 15% to 22%.

Another advantage of legalization is job creation in marijuana nurseries and dispensaries. Colorado saw a 5.4% increase in job gains after it legalized marijuana. But the marijuana industry only contributed a small portion of that gain. The largest growth came from the hotel and restaurant industry.

The biggest disadvantage for states is that marijuana is still illegal on the federal level. That discourages investors. Companies can’t take advantage of initial public offerings to get more cash to grow. They can’t nationalize, thereby benefiting from economies of scale.

The Bottom Line

Thirty-six states in the United States have legalized marijuana for medicinal use. Of these, 15 states also allow recreational use.

As a new industry, the legalization of marijuana has increased revenue for these states and has helped open new employment opportunities. People sick of cancer, glaucoma, Alzheimer’s, and the like now can have easy access to pot. Marijuana relieves them of pain and many other symptoms.

But its contributions as an industry fall short in that they do not outweigh costs. The state finds itself having to pay for new necessities such drug monitoring, licensing, and education, among others. As legalization allowed an increase in the drug’s use, hospitals also saw a rise in cases from the usage. Ingredients in marijuana products have yet to see strict regulation. In addition, the business of pot has limited expansion potential given that it is not a legal substance nationwide.