Researchers from UNM and California Polytechnic University have found increased employment, especially in manufacturing, following the opening of legal recreational cannabis dispensaries.
They found no evidence of declines in worker productivity, suggesting that any negative effects from cannabis legalization are outweighed by the job growth the new markets they create.
In a recent study, “The Effects of Recreational Cannabis Access on Labor Markets: Evidence from Colorado,” published in the IZA Journal of Labor Economics, authors Avinandan Chakraborty and Sarah Stith from UNM’s Department of Economics and Jacqueline Doremus from the Department of Economics at California Poly in San Luis Obispo found that unemployment fell in counties in which dispensaries opened, relative to counties where there were no dispensaries. Employment increased, particularly in manufacturing, in response to dispensaries opening in a county. “In terms of jobs, it is clearly the counties with the recreational dispensaries that benefitted most after Colorado legalized adult-use cannabis,” Chakraborty said.
As New Mexico moves toward opening legal recreational cannabis dispensaries, “Our 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.”
Recreational cannabis dispensaries opened in Colorado starting in 2014, with dispensaries operating in just 58 percent of counties by the end of 2018. Such bans persist today, including in El Paso County, home to Colorado Springs. In their study, the authors looked at labor markets in counties before and after dispensaries entered and compared them with counties with no dispensaries and found that dispensary entry triggered a decrease in the unemployment rate, driven by a 4.5 percent increase in employment. With no increase in wages or labor force participation, new employment appears to be drawing from unemployed and self-employed workers, rather than pulling employees away from other industries.