Marijuana liberalization and public finance: A capital market perspective on the passage of medical use laws

We find that the staggered passage of state-level laws that legalize marijuana for medical use increases states' borrowing costs by 7–9 basis points. Consistent with economic theory on substance use suggesting that marijuana legalization increases local consumption of the drug (by expanding its...

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Main Authors: CHENG, Stephanie F., DE FRANCO, Gus, LIN, Pengkai
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2023
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Online Access:https://ink.library.smu.edu.sg/soa_research/1970
https://ink.library.smu.edu.sg/context/soa_research/article/2997/viewcontent/1_s2.0_S0165410122000398_main.pdf
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spelling sg-smu-ink.soa_research-29972023-05-29T01:45:58Z Marijuana liberalization and public finance: A capital market perspective on the passage of medical use laws CHENG, Stephanie F. DE FRANCO, Gus LIN, Pengkai We find that the staggered passage of state-level laws that legalize marijuana for medical use increases states' borrowing costs by 7–9 basis points. Consistent with economic theory on substance use suggesting that marijuana legalization increases local consumption of the drug (by expanding its availability and reducing its perceived risks), we predict and find that increased consumption represents an important mechanism that explains the higher state bond spreads. We also show that following such laws’ passage, states incur higher marijuana-consumption-related expenditures, including for police, corrections, and public welfare. 2023-02-01T08:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/1970 info:doi/10.1016/j.jacceco.2022.101516 https://ink.library.smu.edu.sg/context/soa_research/article/2997/viewcontent/1_s2.0_S0165410122000398_main.pdf http://creativecommons.org/licenses/by/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University Marijuana Public Health Public Finance Municipal Bonds Accounting Health Policy Public Health
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Marijuana
Public Health
Public Finance
Municipal Bonds
Accounting
Health Policy
Public Health
spellingShingle Marijuana
Public Health
Public Finance
Municipal Bonds
Accounting
Health Policy
Public Health
CHENG, Stephanie F.
DE FRANCO, Gus
LIN, Pengkai
Marijuana liberalization and public finance: A capital market perspective on the passage of medical use laws
description We find that the staggered passage of state-level laws that legalize marijuana for medical use increases states' borrowing costs by 7–9 basis points. Consistent with economic theory on substance use suggesting that marijuana legalization increases local consumption of the drug (by expanding its availability and reducing its perceived risks), we predict and find that increased consumption represents an important mechanism that explains the higher state bond spreads. We also show that following such laws’ passage, states incur higher marijuana-consumption-related expenditures, including for police, corrections, and public welfare.
format text
author CHENG, Stephanie F.
DE FRANCO, Gus
LIN, Pengkai
author_facet CHENG, Stephanie F.
DE FRANCO, Gus
LIN, Pengkai
author_sort CHENG, Stephanie F.
title Marijuana liberalization and public finance: A capital market perspective on the passage of medical use laws
title_short Marijuana liberalization and public finance: A capital market perspective on the passage of medical use laws
title_full Marijuana liberalization and public finance: A capital market perspective on the passage of medical use laws
title_fullStr Marijuana liberalization and public finance: A capital market perspective on the passage of medical use laws
title_full_unstemmed Marijuana liberalization and public finance: A capital market perspective on the passage of medical use laws
title_sort marijuana liberalization and public finance: a capital market perspective on the passage of medical use laws
publisher Institutional Knowledge at Singapore Management University
publishDate 2023
url https://ink.library.smu.edu.sg/soa_research/1970
https://ink.library.smu.edu.sg/context/soa_research/article/2997/viewcontent/1_s2.0_S0165410122000398_main.pdf
_version_ 1770576545495121920