Publication Type
Journal Article
Version
publishedVersion
Publication Date
2-2023
Abstract
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.
Keywords
Marijuana, Public Health, Public Finance, Municipal Bonds
Discipline
Accounting | Health Policy | Public Health
Research Areas
Corporate Reporting and Disclosure
Publication
Journal of Accounting and Economics
Volume
75
Issue
1
First Page
1
Last Page
30
ISSN
0165-4101
Identifier
10.1016/j.jacceco.2022.101516
Publisher
Elsevier
Citation
CHENG, Stephanie F.; DE FRANCO, Gus; and LIN, Pengkai.
Marijuana liberalization and public finance: A capital market perspective on the passage of medical use laws. (2023). Journal of Accounting and Economics. 75, (1), 1-30.
Available at: https://ink.library.smu.edu.sg/soa_research/1970
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jacceco.2022.101516
Included in
Accounting Commons, Health Policy Commons, Public Health Commons