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Employment Under Marijuana

Published online by Cambridge University Press:  05 September 2025

Wei-Fong Pan
Wei-Fong Pan*
Affiliation:
Sun Yat-sen University Business School and Sun Yat-sen University Research Center for Innovation, Entrepreneurship, and Technology Finance
*
panwf5@mail.sysu.edu.cn
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Abstract

This study examines the impact of recreational marijuana laws (RMLs) on firm-level employment using an imputation-based difference-in-differences (DiD) approach across U.S. states. RMLs significantly reduce employment, particularly among firms with high-skilled labor, strong union presence, permissive corporate cultures, and in states with greater dispensary density. Alternative explanations—including economic crises, COVID-19, fiscal changes, labor regulations, and related policies such as smoking bans and right-to-work (RTW) laws—are systematically ruled out through a series of placebo and robustness tests. RMLs also reduce investment, sales growth, and innovation, suggesting that legalization introduces labor-related frictions with broad implications for firm performance and long-term dynamism.

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Type
Research Article
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Journal of Financial and Quantitative Analysis , First View , pp. 1 - 34
Copyright
© The Author(s), 2025. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

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Footnotes

I am grateful for the many constructive comments provided by Kai Li (the editor) and an anonymous reviewer. I also appreciate the valuable feedback received from participants at various seminars and conferences. All remaining errors are my own. This research was supported by the Fundamental Research Funds for the Central Universities, Sun Yat-sen University (Grant No. 2025qntd68).

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