Ask an Economist: Growth and uncertainty for Alaska’s cannabis industry

For nearly three years, Alaska’s cannabis industry has generated steady job growth, tax revenues and new businesses around the state. In this edition of Ask an Economist, Alaska Department of Labor & Workforce Development economist Karinne Wiebold explains how the industry fits within Alaska’s overall economy.

Kirsten Swann: What kind of overall impact does Alaska’s legal cannabis industry have on the state’s economy?

Karinne Wiebold: “The legal marijuana industry in Alaska is kind of a bright spot in that we have been in a recession for the last three-plus years, and so overall the state’s been losing jobs, and cannabis is one of the few industries where we see job growth consistently throughout that period, and it’s because it’s a new and emerging industry. But it’s important to keep in mind that it’s a very, very small component of the overall economy. When we looked at the number of jobs in the marijuana industry compared to the number of jobs overall for Alaska, it’s less than 1 percent that we can tie to the marijuana industry. And when we talk about the state tax revenue, it’s a similarly very small component of overall tax revenue; less than 1 percent.”

KS: How has the impact of this sector changed since the market began to develop a few years ago? Have you seen anything shift since then?

KW: “I did a study back in May that was published in Alaska Economic Trends, and I was looking at the wages and employment that we could tie to marijuana. And we tied it through licensing and the unemployment insurance claim filings for the businesses that held marijuana licenses.

In early 2016, the employment numbers were very low; so we’re talking less than 100. And as we moved through 2016 and into 2017, employment grew exponentially. So when we looked at workers, we were talking, in 2016, of — I’m sorry, not even less than 100, but less than 20. Very small numbers. When we got into 2017 early, we had about 100 in January. By the time we ended in December, there were over 500 jobs in marijuana, so we saw a steady, robust, incremental, month-to-month increase in the number of workers that we could tie to the industry.”

KS: Is there anything that you can tell us about this industry going forward, or any forecasts that the Department of Labor has about this?

KW: “It’s still a very new industry, so I would expect that it’s going to continue to grow. I checked this morning, and there were 271 active licenses. But when I took another look at what was in the queue, there’s almost 200 more permits that are in some process of review and approval. There’s a lot of reason to think that the industry’s going to continue to grow, we just don’t know right now how much and for how long it will continue to grow. We do need to keep in the back of our minds that it’s a very, very small component of the state’s economy, and that I don’t see changing. It’s always going to be a very small part of our economy, but that doesn’t mean it isn’t ultimately going to be a very important component.”