Cross Category Effects of Recreational Cannabis Legalization Across Categories

Seminars - Department Seminar Series
KAPIL TULI, Singapore Management University
13:00 - 14:30
Meeting room 4-E4-SR03, Via Roentgen, 1, 4th floor


Despite the interest of policymakers, marketers, and researchers in recreational cannabis legalization (RCL), the cross-category effects of RCL remain unclear. Specifically, the unintended consequences of RCL on retail sales of alcohol, tobacco, and junk foods (candy and salty snacks) are understudied. Our interest in these categories stems from not just revenue or tax implications on alcohol and tobacco, but also the associated health costs and consequences. Using secondary data sources (Nielsen retailer scanner data and ad intel data), this research focuses on the impact of legalization of recreational cannabis on per capita dollar sales and unit sales of alcohol, tobacco, candy, and salty snacks categories in the state of Colorado. We focus on Colorado as it was the first state to implement RCL and hence provides a clean setting for our research. Using synthetic control method, we find that the implementation of RCL resulted in significant increase in per capita dollar sales of alcohol, salty snacks, and candy, but not for tobacco sales. We conduct several additional analyses including a “null category” and possible changes to pricing and advertising spending of manufacturers to strengthen and validate our findings. We conclude by discussing the potential policy and healthcare related implications of our findings.

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