Businesses Perform Better In States With Legal Cannabis, Study Finds

Businesses Perform Better In States With Legal Cannabis, Study Finds

In addition to creating jobs and generating tax revenue, those states that have legalized marijuana appear to benefit in another way — fostering a robust business environment. Medical and recreational cannabis is legal in 33 states (plus Washington D.C.). Eleven states plus D.C. have legalized recreational marijuana.

A new study from researchers at the University of Iowa analyzed almost 10,000 corporations between 1991 and 2017. The study’s abstract is titled, “Do Firms Get High? The Impact of Marijuana Legalization on Firm Performance, Corporate Innovation, and Entrepreneurial Activity”. The study claims that marijuana legalization has had a positive impact on the business climate in states where it is legal.

Some study highlights:

  • Overall, a company valuation increase of 4.2 percent in states after passage of medical marijuana laws, equating to an increasing market value of $166 million.
  • Innovation is positively impacted by marijuana legalization through crucial employee retention and recruiting benefits.
  • First-time businesses and investors (read: startups and venture capital investments) are higher (pun intended) in marijuana-legal states than their non-legal counterparts.
  • Companies in states with legal marijuana show a stock value increase of 4.56 percent when compared to similar stock values in non-legal states. Interestingly, those in states where cannabis is not legal showed that stocks lost around two percent of their value per year.
  • In states with legalized marijuana, stock returns for companies went up approximately 4.44 percent annually.

Now let’s talk about jobs — specifically job growth. In those states with state-legal weed, researchers approximate that within three years, the number of full-time jobs directly related to the cannabis industry will grow by a whopping 110 percent. Legal cannabis in the U.S. is credited with creating more jobs than any other sector. Additional employment options will come online as the wave of legalization washes across the country — both medical and recreational.

About Jessica Ginet

Jessica Ginet writes for Green Scene Marketing and lives in southern Oregon. A former Tier II recreational cannabis farm manager, she cultivates (and enjoys) smokable hemp and sun-grown cannabis.