Small Business

Marijuana to minimum wages: What's at stake in the midterm elections

David Guard verifies a customer's identity before allowing him to purchase medical marijuana at Capital City Care in Washington, D.C.
Linda Davidson | The Washington Post | Getty Images

As the midterm elections approach Tuesday, businesses in select states have much at stake with ballot proposals that include legalizing marijuana use and raising minimum wages. Governors' races could also lead to expansion of low-cost health coverage under Medicaid.

The outcomes of the proposals will have wide reaching effects on companies, especially smaller Main Street businesses, which collectively have seen modest growth since the recession.

Voters in four places will decide whether to push legalized marijuana further into the mainstream. Alaska, Oregon and Washington, D.C., voters will consider approving recreational use of marijuana, while Florida voters will consider medicinal purposes.

So far, 23 states and the District of Columbia having legalized the drug for medicinal applications. Colorado and Washington state have legalized marijuana for recreational use.

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It's likely all four marijuana initiatives will pass, says Mason Tvert, a spokesman for the Marijuana Policy Project. The group works to reduce or cut penalties for medical and nonmedical use of cannabis.

And the outcomes Tuesday could lead to more jobs and tax revenue.

The state of small business
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The state of small business

Seeing green

America's legal wholesale and retail cannabis industry already reached $1.5 billion in 2013, according to the ArcView Group, which invests in cannabis businesses and collects related data. The sector is forecast to grow to $2.6 billion by this year's end, and to $10.2 billion by 2018.

In Colorado alone, the cannabis market is projected to more than double to $801.9 million this year from $347.2 million in 2013, according to ArcView. In Washington state, where recreational and medicinal uses are allowed, the marijuana sector is forecast to grow to $316.2 million this year from $63.4 million in 2013.

In California—where medicinal usage is allowed and efforts are underway to legalize recreational use in 2016—the market is expected to grow to $1.1 billion this year from $980.2 million, according to ArcView.

And such big state market sizes could translate to revenue and jobs.

In Colorado for example, the state has brought in $37 million in taxes for both retail and medicinal marijuana for this year through August, the latest figures available from the Colorado Department of Revenue.

Plus more than 3,500 jobs have been created through the state's cannabis industry from the beginning of 2013 through the first quarter of this year, according to recent data from the Colorado Department of Labor and Employment.

Other states may move toward legalization once they begin to see how much revenue can be collected from cannabis businesses, says Kim Rueben, senior research associate at the Urban Institute's Tax Policy Center. "If you look at a state like Alaska, their oil and tax revenues are down, so they have limits. Money is a major influence for why they are [looking to] legalize," Rueben said.

In addition to marijuana, some state ballots propose to raise the minimum wage beyond the federal hourly rate of $7.25.

Four red states—Alaska, Arkansas, South Dakota and Nebraska—all have minimum wage initiatives on their ballots this midterm cycle. Voter-approved wage gains in these predominantly Republican states could bolster the push for higher living wages—a key policy area for President Barack Obama and congressional Democrats.

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Illinois voters also are considering raising the minimum wage to $10 an hour, though the proposal is nonbinding.

States with proposed minimum wage hikes on the November ballot

State Proposed hourly<br> minimum wage<br> increase Estimated workers<br> who would get a<br> raise
Nebraska$7.25 to $9.00
(by 2016)
143,000
South Dakota$7.25 to $8.50
(by 2015)
62,000
Alaska$7.75 to $9.75
(by 2016)
46,000
Arkansas$7.25 to $8.50
(by 2017)
168,000
 Total419,000

Source: Source: National Employment Law Project

Medicaid expansion

Medicaid programs also could be expanded in at least six states as a result of governors' races. Democratic gubernatorial candidates in Florida, Georgia, Kansas, Maine, Wisconsin, along with an independent candidate in Alaska, could pursue an expansion of Medicaid health benefits if elected.

"This is a key election for the future of the Medicaid program," said Dan Mendelson, chief executive of Avalere Health, in a statement. Avalere is an advisory company that focuses on health-care issues. Medicaid "expansion will depend on both the outcomes of the governors' races, as well as state legislative balance, as state legislatures often hold the keys," Mendelson said.

Potential Medicaid expansion would come as smaller employers face health insurance mandates. Businesses with 100 or more full-time workers will have to offer coverage or face fines of $2,000 per worker under the Affordable Care Act.