The munchies: Marijuana legalization and food sales in Washington

Abstract

This paper uses the differential timing and varying degree of recreational marijuana access across Washington counties to estimate the relationship between recreational marijuana sales and food sales. Using panel event study design methods over a period that covers the emergence of Washington's retail marijuana industry, we find a statistically significant increase in taxable food sales without evidence of an increase in or substitution away from other food categories. Specifically, the introduction of recreational marijuana sales increases per capita taxable food sales by 5% to 6% and a 1% increase in marijuana sales increases per capita taxable food sales by 0.018%. These findings imply there may be additional tax revenue and health costs that need to be included in the recreational marijuana debate.

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“…These findings are consistent with those of Cheng et al. (2018), Zambiasi and Stillman (2020) and Hodge and Hazel (2022) that respectively indicate RML leads to a 6% increase in Colorado's housing values, approximately a 10%–20% increase in in‐migration to Colorado, and up to a 6% increase in per‐capita taxable food sales in Washington.…”

“…6 Goodman-Bacon (2021) decompositions indicate that the estimates are driven by early policy adopters and mostly driven by the RM and non-RM states part of the decomposition. These findings are consistent with those of Cheng et al (2018), Zambiasi and Stillman (2020) and Hodge and Hazel (2022) that respectively indicate RML leads to a 6% increase in Colorado's housing values, approximately a 10%-20% increase in in-migration to Colorado, and up to a 6% increase in per-capita taxable food sales in Washington.…”

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“…Evans et al (working paper) show that a state's decision to legalize recreational marijuana affects in-state universities' ability to recruit college athletes. Hodge and Hazel (2022) show that RML leads to increased restaurant sales and, consequently, sales tax revenue. While these studies are not directly related to the current research, these articles provide evidence of the growing literature on the importance of marijuana legislation-the effects of MML and, in particular, RML are wide-reaching and robust.…”