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Cannabis on a legalized market

Morling, Alexander LU (2016) NEKH01 20161
Department of Economics
Abstract
The aim is to specify a demand function that describes the demand for cannabis on county
level in the states that have legalized retail sales in order to test hypotheses regarding what
factors influence demand on county and potentially on individual level, as well as to gain
some insight in whether legalization is a good strategy for combatting black markets of
cannabis. Multiple regression analysis is used to estimate the specification with use of 48
observations. 9 hypotheses are tried in order to see what explanatory variables could help
explain sales revenue. The main conclusions is that retail sales is positively significantly
explained by the county characteristics of tourism, education, size of the population, share of
... (More)
The aim is to specify a demand function that describes the demand for cannabis on county
level in the states that have legalized retail sales in order to test hypotheses regarding what
factors influence demand on county and potentially on individual level, as well as to gain
some insight in whether legalization is a good strategy for combatting black markets of
cannabis. Multiple regression analysis is used to estimate the specification with use of 48
observations. 9 hypotheses are tried in order to see what explanatory variables could help
explain sales revenue. The main conclusions is that retail sales is positively significantly
explained by the county characteristics of tourism, education, size of the population, share of
smokers, share of population between 18-65, and negatively by the share of the population
that consumes alcohol to a large extent. Sales are highly explained by these characteristics on
county level but it is harder to tell if the effects on individual level are representative.
However, individual level research supports the outcome of the results on county level. In the
short run legalization supplies a small segment of the cannabis market, and time will tell if
and by how much retail prices decrease in order to be competitive with the black and grey
markets. The specification has some clear issues that should be dealt with before drawing
scientific conclusions of the results. (Less)
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author
Morling, Alexander LU
supervisor
organization
course
NEKH01 20161
year
type
M2 - Bachelor Degree
subject
keywords
Cannabis, County Level Regression, Market Demand, FBI
language
English
id
8871120
date added to LUP
2016-11-24 14:17:57
date last changed
2016-11-24 14:17:57
@misc{8871120,
  abstract     = {The aim is to specify a demand function that describes the demand for cannabis on county
level in the states that have legalized retail sales in order to test hypotheses regarding what
factors influence demand on county and potentially on individual level, as well as to gain
some insight in whether legalization is a good strategy for combatting black markets of
cannabis. Multiple regression analysis is used to estimate the specification with use of 48
observations. 9 hypotheses are tried in order to see what explanatory variables could help
explain sales revenue. The main conclusions is that retail sales is positively significantly
explained by the county characteristics of tourism, education, size of the population, share of
smokers, share of population between 18-65, and negatively by the share of the population
that consumes alcohol to a large extent. Sales are highly explained by these characteristics on
county level but it is harder to tell if the effects on individual level are representative.
However, individual level research supports the outcome of the results on county level. In the
short run legalization supplies a small segment of the cannabis market, and time will tell if
and by how much retail prices decrease in order to be competitive with the black and grey
markets. The specification has some clear issues that should be dealt with before drawing
scientific conclusions of the results.},
  author       = {Morling, Alexander},
  keyword      = {Cannabis,County Level Regression,Market Demand,FBI},
  language     = {eng},
  note         = {Student Paper},
  title        = {Cannabis on a legalized market},
  year         = {2016},
}