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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2023
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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 |
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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 |
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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. |
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text |
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CHENG, Stephanie F. DE FRANCO, Gus LIN, Pengkai |
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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 |
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marijuana liberalization and public finance: a capital market perspective on the passage of medical use laws |
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Institutional Knowledge at Singapore Management University |
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2023 |
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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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