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Frontiers: Asymmetric Effects of Recreational Cannabis Legalization

Author

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  • Pengyuan Wang

    (Department of Marketing, Terry College of Business, University of Georgia, Athens, Georgia 30602)

  • Guiyang Xiong

    (Department of Marketing, Whitman School of Management, Syracuse University, Syracuse, New York 13244)

  • Jian Yang

    (Verizon Media, Sunnyvale, California 94089)

Abstract

Recently, as cannabis was legalized for recreational use in an increasing number of states, it has become more important to understand the effects of cannabis policies, especially on youth. Marketers of other recreational substances are also paying close attention to cannabis policy changes. Alcohol and tobacco companies typically view the cannabis industry as a potential threat and are often found among the opponents to its legalization. However, based on extant research, the treatment effects of recreational cannabis legalization (RCL) and its cross-commodity effects on the alcohol and tobacco industries remain inconclusive. Analyzing large-scale web-based behavioral data, we find that although RCL significantly increases cannabis search, the increase comes from adults only, but not youth. RCL also influences alcohol and tobacco industries asymmetrically: it reduces search volume and advertising effectiveness for alcohol but increases those for tobacco. Hence, cannabis appears to be a substitute for alcohol but not tobacco.

Suggested Citation

  • Pengyuan Wang & Guiyang Xiong & Jian Yang, 2019. "Frontiers: Asymmetric Effects of Recreational Cannabis Legalization," Marketing Science, INFORMS, vol. 38(6), pages 927-936, November.
    • Handle: RePEc:inm:ormksc:v:38:y:2019:i:6:p:927-936
    DOI: 10.1287/mksc.2019.1176
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    8. Armstrong, Michael J., 2023. "Relationships between sales of legal medical cannabis and alcohol in Canada," Health Policy, Elsevier, vol. 128(C), pages 28-33.

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