This post first appeared on Arkansas Cannabiz, the Arkansas Times’ new online marijuana-industry publication.

Legalizing recreational marijuana in Arkansas would have an economic impact of $2.36 billion and create 6,400 jobs over five years, according to an economic impact study commissioned by Responsible Growth Arkansas, the sponsor of an amendment that would legalize cannabis for adults 21 and older.  


The study, conducted by economists at the Arkansas Economic Development Institute, found that legalization would result in a $2.36 billion increase in state gross domestic product between 2023, the first year of legalization, and 2027. 

UPDATED LINK: The full study can be found here.


Based on marijuana programs in other states, the economists said they expect the Arkansas marijuana market to double in the first year of legalization. Arkansas’s dispensaries reported $264.9 million in sales last year and are on pace for $270 million sales this year, according to Scott Hardin, spokesman for the state Department of Finance and Administration. 

The study anticipated sales growing from $665.6 million in 2023 to $984 million by 2027. 


The study also found the Arkansas Adult Use Cannabis Amendment would generate about $460 million in tax revenue over five years, including $303.6 million through a supplemental sales tax on recreational marijuana. The marijuana tax would generate $45.5 million to fund a stipend for law enforcement, $30.4 million for University of Arkansas for Medical Sciences and $15.2 million for drug courts, according to the study. The remaining $212.5 million would go to the state’s general revenues. 

The amendment dedicates 15% of recreational marijuana tax revenue to stipend for certified law enforcement officers, 10% to UAMS and 5% to drug courts. 

The study also found that municipal and county tax revenues would increase by $50.3 million. 

The Department of Finance and Administration is also working on a study on the financial impact of the amendment, Hardin said earlier this week. 


The amendment, which was cleared for the ballot by the Supreme Court last week, would legalize marijuana for adults 21 and older, increase the number of cultivators from eight to 20 and increase the number of dispensaries from 40 to 120. The amendment would eliminate the tax on medical marijuana and institute a 10% supplemental tax on recreational marijuana.


Executive Summary: An Economic Impact Analysis of the Proposed Arkansas Adult Use Cannabis Amendment

In late 2021, the organization known as Responsible Growth Arkansas launched an initiative to amend the Arkansas Constitution to permit adult use of cannabis. Supporters of the Arkansas Adult Use Cannabis Amendment (AAUCA) have successfully collected petition signatures for the measure to appear on the ballot in November 2022. Researchers at the Arkansas Economic Development Institute (AEDI) were commissioned to conduct an economic analysis of the AAUCA proposal. This report summarizes the findings of that research, which covers a five-year forecast period from 2023 to 2027.


Key Findings:

  • Based on the experience of other states that have authorized adult-use cannabis sales, we expect combined sales of medical and adult-use marijuana to more than double in the first year after implementation of AAUCA, with total sales subsequently increasing from approximately $665.6 million in 2023 to $984 million by 2027.
  • The measurable economic impact of introducing an adult-use marijuana market, including economic activity diverted from illicit markets is estimated to include:

    • An increase in state GDP of $2.36 billion over the five-year study period
    • Increases in employment ranging from 4,900 jobs in 2023 to 6,400 jobs in 2027
  • Recognizing that economic activity diverted from illicit markets does not represent the actual economic impact and adjusting accordingly, the true economic impact of the proposed changes remains substantial, with predictions of:

    • An increase in effective GDP of $1.89 billion over the five-year study period.
    • Increases in employment ranging from 3,700 jobs in 2023 to 5,200 in 2027.
  • Fiscal impacts of the AAUCA depend on the measurable, rather than actual impacts. Over the five-year study period, these impacts are estimated to include:

    • State sales tax receipts of $163.1 million plus an additional $303.6 million from the proposed 10% supplemental sales tax on adult-use cannabis, representing an increase of $286.5 million in state sales tax revenue relative to the medical-only baseline scenario.
    • Personal income tax collections increasing by $30.8 million relative to the baseline.
    • County and municipal tax collections totaling $92.6 million, representing an increase of $50.3 million over the baseline.
  • Of the $303.6 million in state revenue generated by the supplemental sales tax, earmarked transfers over the five-year period include:

    • The provision of $45.5 million for annual stipends to law enforcement officers.
    • Funding for UAMS totaling $30.4 million.
    • Support for drug courts of $15.2 million.
  • Much of the potential economic impact derives from purchases by out-of-state consumers, particularly new tourists who are attracted to vacation in Arkansas specifically because of the availability of adult-use cannabis. Discounting this source of demand to zero defines a low-impact scenario that provides a lower bound on our economic impact estimates. Even with this adjustment, economic and fiscal impacts remain significant, including a five-year increase in GDP of $1.66 billion and sales tax receipts that are $240 million above the baseline simulation.