The state of Louisiana needs to make a serious effort to diversify it’s economic portfolio.
Let’s begin with the current state of the Louisiana economy. Namely, the state is heavily reliant on tourism (mostly in the New Orleans area) and the oil and gas industries (and all sub-industries of both, including plastics and chemicals.)
The tourism industry in Louisiana is roughly 187,000 jobs, or 7% of all of the Bayou State’s employment pool, and collects roughly $15.3 billion in income during (non-COVID) years.
The oil and gas industry employs roughly 45,000 people and produced over $4.3 billion in wages, with a total of direct and indirect jobs of 249,800. The industry itself generates around $73 billion in Gross Domestic Product (GDP) for the state of Louisiana.
This is pretty much it.
Outside of these two sectors, Louisiana collects most of it’s tax revenue through small business income taxes. As mentioned, personal income tax from those employed makes up a large percentage of the tax base, as well.
But, unfortunately, the federal government seems hell bent on curbing the use of fossil fuels. While the most recent hits to the Oil & Gas industry from President Joe Biden’s desk may be a little blow out of proportion by Louisiana representatives and residents, the premise makes sense – there’s a distinct fear that an industry and it’s subsidiaries are taking major fire on a national scale, and Louisiana’s backbone are those industries.
Texas is a little upset, definitely, but the Lone Star state has done a bang up job diversifying themselves into finance, technology, green tech, and being generally favorable to large businesses and small businesses alike.
Louisiana loses people and oil jobs to Texas, every year.
It didn’t help the industries argument when, in 2020, Russia and Saudi Arabia got into a back-and-forth over the price of oil, which drove prices down on a global scale. It was shown, then, that America was more of a person watching the chess match as opposed to participating, because oil and gas here in the United States took it on the chin in a bad way compared to the rest of the world.
Not to mention Saudi Arabia, who as part of the Middle East has been synonymous with ‘oil’ since it was first discovered, is investing almost $3 trillion in their country to create recreational opportunities and tourism – diversifying away from oil.
It’s time for Louisiana to begin that route.
To be clear – we’re talking about a beginning for the Bayou State to consider, and perhaps try, other things. Oil and gas will still be around as a creator of the fossil fuels we know and love, and there’s still a market for the subsidiary industries, but the global market is speaking – green tech and sustainability are the hot words – and Louisiana must pay attention.
So here’s an idea – one which is currently being considered in the legislature – shall Louisiana legalize the recreational use of marijuana?
First, it should be noted that in 2020 the legislature opened the door for healthcare professionals to prescribe medical marijuana as a medicinal solution. Up until that point, medicinal marijuana had been legal, but a combination of state and local mandates made it almost impossible to prescribe, and even more difficult to acquire the goods.
In 2021, legalization of recreational marijuana is moving through the legislature. It’s a move which should be supported.
Consider this, Colorado legalized recreational marijuana in 2014. Since then, the industry has ballooned to over $1 billion a year in sales in the state alone, generating $35 million per year in tax revenue and almost 35,000 jobs.
Places like California and Washington have had similar success with legalization.
It may take longer to catch on in Louisiana, due to years of societal backlash and an expert marketing campaign against marijuana, hemp, and other bi-products.
Legalizing the substance will also put fewer people in jail, reducing the tax burden for incarceration.
There are arguments that Denver ‘smells’ since the legalization.
Have you been to New Orleans?
Louisiana faces a potential economic crisis in next 5-10 years, but it doesn’t have to. Supporting legalization will open the door to sorely needed tax revenue in the interim, building infrastructure that was once unavailable.
There’s not going to be a windfall of federal money every year. The state needs to make choices that increase revenues and employment, and starting with an industry that has show early and quick success elsewhere seems like a good way to do it.
McHugh David is publisher of the Livingston Parish News.