Media Release: New research project shows what is really happening with cannabis legalisation in the US

Media Release
25 June, 2020

Wellington, 25 June 2020 - The US experience with cannabis legalisation is as diverse as its many models – each state runs things differently, according to a new research project by the New Zealand Initiative.

The Cannabis Legalisation and Control Bill referendum is booked for 19 September, and all sides of the cannabis debate will want to pick examples that best fit their position.

The New Zealand Initiative has produced a primer on the US experience, highlighting the policies and outcomes in each state, to help voters gain a wider picture about the coming referendum.

The Bill plans to create a regulation regime to legalise the production, possession and use of cannabis in New Zealand for those aged above 20 years of age but with tighter restrictions on the substance than currently exist for both tobacco and alcohol.

Over in the US, a total of 11 states have fully legalised cannabis use while 33 have legalised only medical usage. The remainder either aren’t considering any law changes or are in the process of doing so.

Essentially, the US offers 50 live experiments on whether cannabis legalisation works.

Key insights:

Tax revenue
At a high level, legalisation creates a new tax revenue source. But the intake so far has been as mixed as the states’ laws themselves. California, for instance, was expected to generate more than $US1 billion each year, but after recreational use was full legalised in 2019, the state only took in a third of that figure.

Likewise, Massachusetts expected to raise about $US63 million annually, but in July 2019 after its first year of legalisation it had generated less than half of that.

On the other hand, Colorado met its expectations while Nevada sped past its estimates easily. It turns out the demand for cannabis in some states may have been lower than predicted and the difficulty of taxing the drug more complicated than many initially thought.

At a national level, neither violent nor property crime rose after cannabis legalisation. Or, more precisely, multiple studies have not found any statistical correlation – so far.

However, Kiwi researchers found that California’s medical marijuana law may have actually reduced levels of both property and violent crime by perhaps 20%.

Commercial involvement
Many states have been friendly to strong commercial involvement in cannabis growing, distribution, and retail. In 2018, the market cap of the US cannabis industry was estimated at $US11.3 billion, expanding at a compound annual growth rate of 14.5% out to at least 2025. New Zealand’s proposed framework would make larger-scale commercial operations more difficult.

All of this data – and much more – is displayed at the Initiative’s website in a digital, interactive page on a clickable state-by-state map of the US. The project is meant to help anyone involved in the looming referendum debate with friends and family.

If advocates on either side point to the experience in any state, voters can use the tool to check if that state is being misrepresented or accurately portrayed.

The clickable state-by-state map of the US is available here.


For more information, please contact:

Linda Heerink, Communications Officer
P: 021 172 8036

Stay in the loop: Subscribe to updates