“High Returns: The Effects of Legalizing Recreational Marijuana on Local Economic Activity and Household Finance”

The title of this post is the title of this notable new paper authored by John Manuel Barrios, Jared N. Jennings and Jung Min Kim now available via SSRN.  Here is its abstract:

We examine the impact of recreational marijuana legalization and distribution on local economic activity, household finance, and personal creditworthiness across eight U.S. states from 2001 to 2019.  Utilizing a staggered difference-indifference model at the county level, we observe significant improvements in local economies and household finances following the opening of marijuana dispensaries.  These improvements are reflected in increased population growth, GDP, personal income, and housing prices.  Additionally, personal creditworthiness also improves, as evidenced by a reduction in derogatory accounts and a rise in credit scores.  Importantly, the benefits of legalization are more pronounced in underprivileged counties, underscoring a potential social equity dimension in the economic gains arising from recreational marijuana legalization.  Our findings offer valuable insights to the ongoing debate over the economic implications of marijuana legalization, particularly concerning its role in promoting financial stability and reducing economic disparities.