For a very long time, advocates for legalizing marijuana have outlined the revenue states stand to gain from legalization. Indeed, states like Colorado have brought in massive revenues through cannabis sales in the recent past. Furthermore, results from a new study show that legal cannabis has a positive effect on the tourism and hospitality industry.
Dubbed (Pot)Heads in Beds: The Effect of Marijuana Legalization on Hotel Occupancy in Colorado and Washington, the study was published online and appears in the latest issue of Regional Policy and Analysis. It states that Colorado had a considerable increase in room rentals soon after the state began marijuana sales. Washington State also saw an increase in tourism after legalization, although not as much as in Colorado.
Washington State and Colorado were the first two states in the U.S. to legalize adult-use cannabis. Researchers compared hotel room rentals in the two states with states that prohibited adult use from 2011 and 2015 and they found that after legalization, there was an influx in tourist numbers and a rise in hotel revenue. Colorado saw monthly hotel booking increases of 2.5% to 4% and once retail sales opened, bookings increased by 6% to 7%.
Washington, on the other hand, saw increases at roughly half of Colorado’s rate, while hotel bookings increased by 1% after possession was legalized and 3.5% after retail stores opened.
Colorado saw its room rates increase by about $3.76 (2.8 percent) after possession of cannabis became legal and $6.31 (3.8 percent) after legal sales began. Monthly revenue increased by $9.33 million (6.75%) after possession became legal and $23.71 million once retail sales began.
According to the researchers, Colorado’s more central location might be responsible for the difference in numbers with Washington. The paper notes that Denver’s airport is “a major hub for United Airlines.” In Washington’s case, it’s proximity to British Columbia, which in the researchers’ opinion has “a strong reputation for growing marijuana and a laid back attitude toward marijuana consumption,” may have played a part.
“Another possible explanation,” the study speculates, “is that Colorado may have achieved a first mover advantage over Washington since it legalized commercial sale six months earlier than Washington.”
Aside from a 2015 report commissioned by the Colorado Department of Revenue which estimated that tourists made up to a large portion of the state’s retail marijuana activity, most evidence backing the connection between legalization and increased tourism was anecdotal. This study offers concrete proof that there is indeed a connection.
“These results suggest an uptick in tourism following marijuana legalization but until now, there have been no studies directly examining the effect of legalization on tourism,” said the researchers. Now, they will wait and see how things play out in the long term.
“While marijuana legalization increased tourism, especially in Colorado, the benefit may wane as additional states including California, Michigan, and Illinois, legalize the possession and sale of marijuana.”
All the same, industry actors like Plus Products Inc. (CSE: PLUS) (OTCQX: PLPRF) see these findings as proof of the nearly endless benefits of legalizing marijuana.
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