Recently, a study, done by Avinandan Chakraborty and Sarah Stith from The University of New Mexico’s Department of Economics and Jacqueline Doremus from the Department of Economics at California Polytechnical University in San Luis Obispo, has revealed a rise in employment from the legalization of cannabis.
Cannabis was for long a banned substance in the U.S, which means that people were prohibited from using cannabis or any of its by-products. Possession of cannabis flower, bud, or their by-products was also illegal and invited punishment of incarceration or fine, or both.
However, the state of California made history in 1996, by becoming the first state in the U.S. to decriminalize cannabis use. Later on, many other states also followed suit so that in many states in the U.S, cannabis is no longer a banned substance. Despite that, opposition to the use of cannabis exists in many places.
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Decriminalization of the use of cannabis has predominantly been done for its medical benefits, though many states now allow it for recreational use also.
In the study named ‘The Effects of Recreational Cannabis Access on Labor Markets: Evidence from Colorado’, the authors have found that employment has increased in many places as a result of the opening of dispensaries offering recreational cannabis.
They found that unemployment decreased in counties in which dispensaries were opened, compared to those in which dispensaries were not opened. The new employment opportunities were generated mainly in the manufacturing sector of cannabis, in response to the opening of new dispensaries.
The writers also did not find any evidence for a decline in workers’ productivity. The indication here is that if there were any negative effects from the legalization of cannabis, they have been far outweighed by the positive effect of enhanced employment opportunities.
Avinandan Chakraborty, one of the authors, explained that in terms of jobs, it was clearly the counties with the recreational dispensaries that benefitted most after Colorado legalized adult-use cannabis.
Recreational cannabis dispensaries opened in Colorado first in 2014. By 2018, dispensaries were operating in 58% of the counties. Even now, restrictions on cannabis use have not been uniformly lifted across all counties. El Paso County, which is home to Colorado Springs, still has restrictions on the sale of cannabis.
In their study, the authors compared counties before and after dispensaries were opened in them, with counties in which dispensaries did not open at all. They found that dispensary-entry triggered a decrease in the unemployment rate, with a 4.5% increase in employment, without any reduction in labor-force participation.
This indicates that the new employment opportunity is drawing people from among those who are unemployed or self-employed and not pulling workers away from other industries.
The absence of any adverse effect on workers’ wages or on participation in the labor force indicates that the negative effects on workers from legal access to cannabis, such as decreased job performance or reduced efforts to find employment, appears to be limited.
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The study finds hardly any evidence of advantages in counties that do not have dispensaries and finds more benefits in counties with small pre-existing medical markets. However, counties without dispensaries do not appear to be affected by dispensary entry, either positively or negatively. Simply increasing sales offer only limited benefits.
New Mexico recently legalized adult use of cannabis. Connecting the study to this development, Stith, one of the authors, says that their study’s results suggest that by preventing counties from banning dispensaries, New Mexico’s approach to legalizing cannabis will yield more widespread employment benefits than those experienced in Colorado.
She adds that people may already have begun experiencing some of the benefits as producers begin preparing for dispensaries to open in April 2022.