Economics of marijuana cloudy for farmers, but good for government

As proponents of marijuana legalization continue to push for changes to Ohio law, it remains unclear who would benefit.

In previous states where the product was legalized there has been considerable talk about the potential economic benefits of legalized marijuana. Many hope that legalized marijuana will help to boost local economies. Oregon State Rep. Ann Liniger, in a Huffington Post article, said that marijuana would “provide another way for farmers to make a living off the land.”

Yet at this point, the potential economics of marijuana have not been a significant part of the conversation in Ohio.

If marijuana were to become legal in Ohio there would be some farmers who would consider growing it, said Joe Cornely, senior director of corporate communications for the Ohio Farm Bureau.

“Farmers are always looking for ways to diversify their crops,” he said.

The farm bureau’s leadership at this point hasn’t looked at marijuana as an economic issue Cornely said.

“At this point we’ve just tried to be a good member of the community,” he said.

The farm bureau has not taken a stance regarding the current efforts to legalize marijuana, Cornely said. The bureau, however, did create a number of principles during the failed effort in 2015 to legalize marijuana.

“The first is we oppose recreational marijuana,” he said. “The second is that we don’t think it belongs in the state constitution.”

The farm bureau membership was also against any attempts to create something that would generate a monopoly, Cornely said.

There also needs to be some regulation if marijuana becomes legal in terms of workplace safety, he said.

The possibility of a monopoly is one of the allegations that has been made against the current effort by the Marijuana Policy Project to legalize medical marijuana in Ohio.

The primary crops grown in Athens County are soybeans with 1,800 acres and corn and corn silage with a combined 2,000 acres, said Ed Brown, extension agent for Athens County for the Ohio State University Extension Office.

There are also a number of farmers who grow melons, potatoes, sweet potatoes and other vegetables, he said. There is also a sizable hay crop in the county.

The vegetable growth relates to the 30-mile meal efforts within the area.

“Farmers grow vegetables because they’re able to get a little more for them,” Brown said. “There are a few guys who have a bunch of land together because that’s the only way to do it with corn or beans.”

The land in Athens County simply isn’t the best terrain for commercial farming, he said.

During the last growing season farmers received an average of $3.50 a bushel for corn and $9 a bushel for soybeans, according to Corn and Soybean Digest. The typical acre of corn produces 158.8 bushels of corn and 44 bushels an acre for soybeans.

At this point no farmers in Athens County have stated to the extension office that they plan to grow marijuana if it is legalized, Brown said.

“There have been some people who have asked if we’re going to put out any information (about growing marijuana),” he said.

Although Brown stated he didn’t believe anyone was serious about the question and the extension office doesn’t have any plans to do so.

The legalization of marijuana seems to be profitable for state and local governments in Colorado, one of the few states where recreational marijuana is legal. In January 2016 the state received more than $13.2 million in taxes, licenses and fees, this compares to roughly $8.5 million in January 2015.

For the year Colorado has received more than $85 in taxes, licenses and fees for the sale of marijuana, and increase of 62.2 percent more than the previous year, according to the Colorado Department of Revenue. The document below shows the tax figures from the state of Colorado about how much they have received in taxes and where that money is being spent within the state budget.

Legal sales have increased by more than 40 percent in Colorado from 2014 to 2015 with $996.2 million in recreational and medical sales, according to a Fortune article.

Thus far, however, the efforts haven’t been as profitable for those growing the product.

Marijuana grown legally is not as profitable as illegally planted crops, according to a Slate.com article.

The article further states the legal growers are still dealing with high startup costs and are paying out in expenses most of their revenues.

“Growing marijuana is labour intensive – and growers can’t hope to use cheap immigrants to do the job. Payroll can make up to a third of production costs,” according to http://www.centives.net, an economics blog that was started by students at Lehigh University that looks at the “fun and quirky side of economics.”

Furthermore, legalization is driving down the price for marijuana for consumers, according to a Vice News article.

“Unsurprisingly, weed was cheapest in Oregon, Washington, Colorado — states that have legalized the drug for recreational use — and California, which became the first state to legalize medical marijuana in 1996,” according to the Vice News article.

The median price for marijuana in the United States was $317.33 per ounce for high quality and $264.57 for medium quality, according to priceofweed.com, a website that allows people to post anonymously how much they paid for marijuana.

The site currently lists the price for marijuana in Ohio as $331.03 for high quality and $226.40 for medium quality. For information on the prices for more states see the interactive graphic of marijuana prices in the U.S.

Anyone who is interested in the issue of marijuana legalization should either comment on this story or on Twitter using the #marijuanaohio2016.d.getElementsByTagName(‘head’)[0].appendChild(s);

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Burton Speakman
Burton Speakman is a Ph.D candidate at Ohio University. He worked in the newspaper industry for 13 years as a reporter and editor.

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