Earlier this morning, Scioto Analysis released its most recent cost-benefit analysis looking at the impact of Ohio’s Ballot Issue Two, recreational marijuana legalization. We found that this policy will likely generate about $260 million in net benefits for society, though likely results ranged between $200 million in net costs and $1.9 billion of net benefits. Although there is a chance the costs outweigh the benefits, our simulation model suggests that in 90% of likely scenarios, recreational marijuana legalization will have a positive net economic benefit on society.
The largest reason for these benefits is the estimated $190 million of tax revenue that we expect to be collected from the sale of recreational marijuana. In the language of ballot initiative, this revenue would be earmarked in part for two highly beneficial programs: the Cannabis Social Equity and Jobs Fund and the Substance Abuse Addiction Fund. We expect both of these programs to generate over $800 million of social value by themselves.
The most significant cost we monetized was the lost productivity of workers in certain industries. Past research has shown that states that legalized recreational marijuana experience reductions in productivity amounting to roughly a 1% decrease per worker. In Ohio, we calculate that this will lead to roughly $760 million worth of lost productivity in the short run.
“The key reason benefits are likely to outweigh costs when it comes to marijuana legalization is how the tax dollars raised are going to be used,” said Michael Hartnett, policy analyst. “The programs outlined in the ballot initiative have historically been very efficient ways to use public dollars, and will likely generate a lot of value for Ohioans.”
This study is the most recent cost-benefit analysis conducted by Scioto Analysis. Previous cost-benefit analyses include research on water quality programs, municipal tree planting, volunteer programs, and school closures for COVID-19.