| dc.description.abstract | The United States has reached a turning point with regard to its drug policy. Not only are the majority of Americans in favor of marijuana policy reform, but four states and the District of Columbia have legalized the controversial substance. Political reform and a paradigm shift in public sentiment provide unprecedented opportunities to evaluate economic estimates of legalization's impact on the cannabis markets. This study seeks to examine the fiscal, economic, and social impact of cannabis legalization by examining variables such as- tax revenue, commodity price and consumption, criminal activity, the job market, the real estate market, and the stock market. Marijuana taxation in Colorado has been moderately successful, but has been hampered by high effective tax rates and the relative strength of the untaxed homegrown and black market segments that satisfy a significant portion of the state's marijuana demand. In contrast to previous literature, marijuana was found to be an economic substitute for beer and yet an economic complement for wine. Again, in contrast to previous literature, marijuana legalization was found to be positively correlated with criminal activity, with the exception of crimes against property. There is not yet enough data to reach a conclusion about legalization's impact on the job market, but early signals are positive. The Colorado real estate market was shown to relatively outperform other regions since legalization was passed. Finally, although marijuana legalization has been a positive catalyst for publicly-traded companies whose operations relate to the marijuana industry, many of these investments remain unsuitable for the average investor, especially on a risk-adjusted basis. A discussion of these findings is presented below, along with considerations for future research. | |
