<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>Recreational cannabis markets possibly increase labor demand through investments in facilities for growing, processing, and retail sales of cannabis, as well as through other industries such as manufacturing, leisure, and hospitality. However, this increase in labor demand may vary substantially across counties within a state as most states with legal recreational cannabis allow individual counties to ban commercial cannabis sales. Meanwhile, labor supply may change through positive and negative effects from cannabis use. Using county-level Colorado data from 2011 to 2018 and exploiting variation across counties in the existence and timing of the start of dispensary sales, we test for changes in the unemployment rate, employment, and wages, overall and by industry subsector. Consistent with an increase in labor demand, we estimate that the sale of recreational cannabis through dispensaries is associated with a 0.7 percentage point decrease in the unemployment rate with no effect on the size of the labor force. We also find a 4.5% increase in the number of employees, with the strongest effects found in manufacturing. We find no effect on wages. Given the lack of a reduction in labor force participation or wages, negative effects on labor supply are likely limited, in line with the existing literature. The decrease in unemployment, coupled with an increase in the number of employees, indicates that labor demand effects likely dominate effects on labor supply. Our results suggest that policymakers considering recreational access to cannabis should anticipate a possible increase in employment.</p>
</abstract>

Recreational cannabis markets possibly increase labor demand through investments in facilities for growing, processing, and retail sales of cannabis, as well as through other industries such as manufacturing, leisure, and hospitality. However, this increase in labor demand may vary substantially across counties within a state as most states with legal recreational cannabis allow individual counties to ban commercial cannabis sales. Meanwhile, labor supply may change through positive and negative effects from cannabis use. Using county-level Colorado data from 2011 to 2018 and exploiting variation across counties in the existence and timing of the start of dispensary sales, we test for changes in the unemployment rate, employment, and wages, overall and by industry subsector. Consistent with an increase in labor demand, we estimate that the sale of recreational cannabis through dispensaries is associated with a 0.7 percentage point decrease in the unemployment rate with no effect on the size of the labor force. We also find a 4.5% increase in the number of employees, with the strongest effects found in manufacturing. We find no effect on wages. Given the lack of a reduction in labor force participation or wages, negative effects on labor supply are likely limited, in line with the existing literature. The decrease in unemployment, coupled with an increase in the number of employees, indicates that labor demand effects likely dominate effects on labor supply. Our results suggest that policymakers considering recreational access to cannabis should anticipate a possible increase in employment.

The effects of recreational cannabis access on labor markets: evidence from Colorado

Department of Economics, Orfalea College of Business

IZA Journal of Labor Economics

This work is licensed under the Creative Commons Attribution 4.0 International License.

Recreational cannabis markets possibly increase labor demand through investments in facilities for growing, processing, and retail sales of cannabis, as well...

The effects of recreational cannabis access on labor markets: evidence from Colorado

Data publikacji: 25 lis 2021

Zakres stron: -

Przyjęty: 26 kwi 2021

DOI: https://doi.org/10.2478/izajole-2021-0005

Słowa kluczowe
cannabis, marijuana, labor demand, manufacturing

© 2021 Avinandan Chakraborty et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

The effects of recreational cannabis access on labor markets: evidence from Colorado

Data publikacji: 25 lis 2021

Zakres stron: -

Przyjęty: 26 kwi 2021

DOI: https://doi.org/10.2478/izajole-2021-0005

Słowa kluczowecannabis, marijuana, labor demand, manufacturing

© 2021 Avinandan Chakraborty et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Słowa kluczowe
cannabis, marijuana, labor demand, manufacturing