Legalization of recreational marijuana and its impact on economic activitie

This paper analyzes the relationship between recreational marijuana legalization and the changes in economic activity, defined in employment and businesses. Using the North American Industry Classification System data gathered by the Bureau of Labor Statistics, this paper conducts multiple multivariate regressions among different industry codes as well as conducting a difference in differences test to find a causal relationship between marijuana legalization and its impact of economic activity. Results show that despite previous literature and projections showing a positive effect on economic activity, the multiple regressions in this paper suggests that there is no impact of marijuana legalization on employment and businesses in the given industries. However, it is also important to take into account the fact that there is no accurate data on the actual employment numbers in the marijuana industry both at the state and federal level. Therefore, it might be necessary to re-conduct the regression models suggested in this paper once more data is available and marijuana policies in the United States change in the future.