Date of Award

Spring 1-1-2019

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

First Advisor

Scott J. Savage

Second Advisor

Yongmin Chen

Third Advisor

Scott J. Savage

Fourth Advisor

Yongmin Chen

Fifth Advisor

Jin-Hyuk Kim

Abstract

This dissertation examines aspects of the legal cannabis industry in the United States. This includes welfare implications of legalized cannabis in Colorado as well as motivations for legalization across the United States. The goal of this dissertation is to provide insight into a newly deregulated industry for which there is relatively little prior research.

My first chapter investigates the welfare implications of taxation for the recreational cannabis industry in Colorado. Welfare implications of tax policy on cannabis can be significant. I estimate the sales tax rate which maximizes tax revenue using sales data on cannabis edibles from 2014-2016. Estimation is conducted using a random coefficient logit model. Varying sales tax rates are simulated to determine consumer surplus, producer surplus, and tax revenue. Results suggest revenue from sales taxes is maximized at a rate of 47.6%.

My second chapter measures the determinants of cannabis legalization throughout the United States. I account for heterogeneous characteristics of cannabis laws which have been implemented since the 1990’s. I construct a panel of state-year correlates which may be strong determinants of legalization. This includes information on population demographics, education, health, crime, and political variables. An event history analysis is conducted using a logit model. I find political and religious ideology as well as private interests in alcohol and cigarettes to be strong determinants of cannabis policy.

My third chapter explores the impact of available legal supply of cannabis on fatal traffic accidents in Colorado counties. Cannabis impaired driving is a major concern surrounding legalization. I measure legal supply of cannabis at the county and month level using cannabis dispensary licensing data from the Colorado Department of Revenue. Fatal accidents follow a count process with non-negative integer values. I utilize a Poisson fixed effects model to explore this impact. I find available legal supply of cannabis has no significant impact on the frequency of fatal accidents in Colorado Counties.

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