Employment Under Marijuana

Wei-Fong Pan

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

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