A study on the possible economic impact of recreational marijuana has finally been submitted to the Legislature for review.
The study, obtained by the Guam Visitors Bureau and adopted by the Cannabis Control Board, was actually completed since last March. However, due to the COVID-19 pandemic and public health emergency, the submission of the report to the legislature was delayed.
“Since the IEIS was completed prior to the pandemic, the board found it necessary to disclose that the information produced in this study represents a normal year of economic activity on Guam. The report does not demonstrate any negative impacts as a direct result of the ongoing public health emergency,” said Vanessa Williams, chairwoman of the Cannabis Control Board.
Case studies of destinations that recently legalized recreational cannabis were used as a basis for modeling the impact estimates for Guam. The case study findings were also adjusted to account for the local economy, visitor origin, and cultural issues associated with cannabis in Asia.
According to the study, recreational cannabis in Guam is expected to generate nearly $11.5 million in spending in the cannabis industry by residents and visitors in the first year of legalization
Recreational cannabis is also expected to increase the number of visitors to Guam by 31,500 or approximately 1.8% in the first year of legalization. Additionally, 35,000 current visitors – approximately 2% of all visitors – are expected to participate in the cannabis industry. In total, 3.8% of all visitors to Guam – 1.8% new visitors and 2% current visitors – are expected to use cannabis in the first year of legalization.
Each new and current visitor that uses cannabis is expected to spend approximately $20 per trip on cannabis. In total, visitors are expected to spend approximately $1.3 million on cannabis in the first year of legalization.
According to the study, nearly 13% of Guam residents over 21 years old are also expected to use recreational cannabis and each resident that uses recreational cannabis is expected to spend an average of $705 per year on cannabis. In total, residents are expected to spend approximately $10.2 million on cannabis in the first year of legalization.
In addition, recreational cannabis in Guam is expected to generate $64 million in spending across a wide range of sectors in the first year of legalization such as in food & beverage ($8 million), lodging ($13 million includes all industry activity, including meetings, catering, etc.), retail ($10 million), entertainment ($4 million), and local transport ($2 million).
Moreover, the estimated direct spending of $64 million – which includes the cannabis industry and new visitor tourism spending – is projected to support 528 full-time equivalent jobs on an annualized basis and $17 million in direct labor income the first year of legalization.
The estimated direct spending of $64 million is expected to translate into $93 million in business sales including indirect and induced impacts in the first year of legalization.
While the majority of sales are in industries directly serving visitors, $9 million in business sales accrued to the finance, insurance, and real estate industry as a result of selling to tourism businesses.
Similarly, significant benefits accrued to sectors such as the business services ($6 million) and education and health care ($3 million).
Finally, recreational cannabis in Guam is expected to generate significant fiscal (tax) impacts as spending ripples through the Guam economy. The study estimates that direct spending will generate $8 million in tax revenue during the first year of legalization.
The cannabis board has already completed the draft rules and regulations for the industry but it still has to officially approve them. A series of public hearings are scheduled next month to get feedback from the community.