High(er) Education: Legalization of Marijuana and … Long...Currently, medical marijuana is...
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RESEARCH POSTER PRESENTATION DESIGN © 2015 www.PosterPresentations.com State funding for higher education is discretionary (Li, 2017) as a result of the ability of institutions to charge students in the form of tuition (Dar, 2012). In light of fiscal budget cuts, much research has examined state policies and legislation in relation to funding education. Many of these policies are controversial yet produce significant contributions in supporting higher education. Allen (1991) examines revenue from taxes associated with state lottery and its impact on funding education. Lotteries were once privately managed but are now controlled by states. States have supported this gambling initiative given the possibility of revenue. Karcher (1992) ascertains that states utilize lottery-based revenue to offset discretionary budget items. Hickman (2009) notes that states, such as Florida, have utilized lottery revenue to provide merit-based funding for students pursuing post-secondary education. As noted by Ness (2010) and others, connecting the adoption of potentially controversial state policies to education initiatives have been an effective mechanism to ensure political success. This may be applied to legalized marijuana. Introduction & Prior Literature Currently, medical marijuana is legalized in 29 states and the District of Columbia; recreational marijuana is legalized in DC and 9 of these states. The cannabis industry is currently valued at $35 billion, with significant revenue opportunities for local businesses as well as state and local governments (Bryant, 2017). Colorado, for example, imposed a 2.9% sales tax on marijuana (Bryant, 2017). As a result, Colorado collected over $193 million in revenue in 2016 (Colorado Department of Revenue, 2016). Other states have used money to fund the broad state initiatives, medical marijuana programs, law enforcement and even drug education (Bryant, 2017). For example, both Nevada (Nev. 372A.110, 2015) and Rhode Island (RI Gen Laws 44-67-11, 2016) appropriate revenue from marijuana directly to the state’s general fund. Figure 1 provides an overview of current marijuana legalization policies across the US. Connecting this to the conceptual framework of policy diffusion, states who gain revenue from legalized marijuana may influence legalization in other states. Policy Mechanism Data • 1991-2017 data from the National Associate of State Budget Officers’ (NASBO) annual state expenditure report • State-level factors from the Bureau of Economic Analysis, Bureau of Labor Statistics, and Carl Klarner and National Conference of State Legislatures • Policy adoptions from primary sourcing Empirical Strategy To estimate the overall impact of the adoption of marijuana legalization polices, we used a generalized difference-in-difference (GDiD) model. This is similar to approaches from Dynarski (2000), Hillman, Tandberg, & Gross (2014), and Zhang & Ness, (2010) and accounts for the varying adoption period that a traditional DiD approach cannot. The causal estimates from our specification are approximated through a two-way fixed-effects model (Bertrand, Duflo, & Mullainathan, 2004). Additionally, we capitalize on changes in marijuana legislation with states (expansion from medical to recreational) to further test the impact of the policy on education funding. Data and Methods Our research aims to estimate the impact of marijuana legalization policies on state funding for education. As state higher education funding is viewed as discretionary, increases in state revenues should be linked in corresponding increase in higher education support. This study is guided by the following research questions: 1. To what extent does the introduction of marijuana legalization policies impact state support for public higher education? 2. Do medical versus recreational polices have a differing effect on education funding increases? Research Questions Results (Cont.) Table 2 provides the estimates from GDiD specification. The adoption of the medically approval marijuana did not significantly impact total state revenues nor pass-through for higher education expenditures. However, when we interact the adoption of medical marijuana policies with the adoption of recreationally marijuana policy we find a statically significant (p<0.10) effect on total higher education expenditures. The additional expenditures appear to be concentrated in “Other State Funds” which are typically special tax provisions and revenues sources – of which revenues from marijuana sales would be primarily concentrated. We ran a battery of falsifications checks, including prior policy year placebo effects and random policy assignment effects, and found no statistically significant effects. Conclusions Findings from this study suggest that the adoption of marijuana legalization policies only significantly impacts higher education expenditures as states move from medical only policies to medical and recreational policies. This brings into questions about the potential policy trade-offs associated with expanding legalized marijuana access as a mechanism to increase state revenues to support public higher education. University of Florida, College of Education, Higher Education Administration & Policy, HEAP Graduate Student Travel Grant Award Maryanne Long Ph.D. Student Higher Education Administration & Policy University of Florida [email protected] References available upon request High(er) Education: Legalization of Marijuana and its Impact on Fiscal Support for Public Higher Education Maryanne Long & Dennis A. Kramer II, Ph.D. Results Table 1 provides means and standard deviations for our two (2) primary outcomes – total state revenue and higher education expenditures before and after the policy. We compare states who: 1) never adopted; 2) only adopted medical provisions; and 3) adoption both medical and recreationally marijuana policies. Descriptively we find a widening gap between non-adopters and adoptions on both state revenue and higher education expenditures, with states adopting both medical and recreationally policy experiencing larger increase in both outcomes. Total State Revenue Total Expenditures General Funds Federal Funds Other State Funds Bond Funds 0.031 -0.003 -0.066 0.115 0.135 -0.097 (0.062) (0.062) (0.054) (0.290) (0.156) (0.252) 0.132 0.337+ 0.077 -0.157 0.349+ -0.063 (0.178) (0.178) (0.098) (1.212) (0.179) (0.181) R-squared 0.889 0.605 0.466 0.171 0.273 0.107 Number of Observations 4,840 1,201 1,201 1,137 1,175 840 Number of Groups 344 51 51 51 51 51 State-Level Time Varying Covariates Yes Yes Yes Yes Yes Yes State Fixed-Effects Yes Yes Yes Yes Yes Yes Year Fixed-Effects Yes Yes Yes Yes Yes Yes Notes. State clustered robust standard errors in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001 Table 2: Effects of Marijuana Policies on Higher Education Expenditures Medical Marijuana Medical * Recreational Marijuana Higher Education Expenditures Fund Categories Non- Adopters Non- Adopters Total Total Difference Total Difference Total Total Difference Total Difference 12,332.03 18,031.61 5,699.58 20,454.08 8,122.05 30,697.70 43,709.86 13,012.16 62,074.49 31,376.79 (8551.22) (17699.09) (29792.60) (28358.21) (39453.44) (87916.60) 1,735.84 1,413.54 -322.30 1,620.35 -115.49 4,617.31 3,080.85 -1,536.46 5,087.36 470.05 (1240.68) (1188.31) (2271.44) (0.098) (4074.37) (2707.96) (6212.96) # of States 22 22 Medical & Recreational 8 21 21 8 Table 1: Descriptives on Primary Outcomes Total State Revenue (millions) Higher Education Expenditures (millions) Notes. State clustered robust standard errors in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001 Medical Only Medical & Recreational Pre- Policy (1996) Post Policy (2017) Medical Only Figure 1 Acknowledgements Corresponding Author’s Information Limitations Given recent adoptions, this study is limited by the number of treated states with recreational marijuana policy. Additionally, further analysis is needed to test the sensitivity of the estimates with the inclusion of additional covariates.
Transcript of High(er) Education: Legalization of Marijuana and … Long...Currently, medical marijuana is...
RESEARCH POSTER PRESENTATION DESIGN © 2015
www.PosterPresentations.com
State funding for higher education is discretionary (Li, 2017) as a result of the ability of institutions to charge students in the form of tuition (Dar, 2012). In light of fiscal budget cuts, much research has examined state policies and legislation in relation to funding education. Many of these policies are controversial yet produce significant contributions in supporting higher education.
Allen (1991) examines revenue from taxes associated with state lottery and its impact on funding education. Lotteries were once privately managed but are now controlled by states. States have supported this gambling initiative given the possibility of revenue. Karcher (1992) ascertains that states utilize lottery-based revenue to offset discretionary budget items. Hickman (2009) notes that states, such as Florida, have utilized lottery revenue to provide merit-based funding for students pursuing post-secondary education. As noted by Ness (2010) and others, connecting the adoption of potentially controversial state policies to education initiatives have been an effective mechanism to ensure political success. This may be applied to legalized marijuana.
Introduction & Prior Literature
Currently, medical marijuana is legalized in 29 states and the District of Columbia; recreational marijuana is legalized in DC and 9 of these states. The cannabis industry is currently valued at $35 billion, with significant revenue opportunities for local businesses as well as state and local governments (Bryant, 2017). Colorado, for example, imposed a 2.9% sales tax on marijuana (Bryant, 2017). As a result, Colorado collected over $193 million in revenue in 2016 (Colorado Department of Revenue, 2016). Other states have used money to fund the broad state initiatives, medical marijuana programs, law enforcement and even drug education (Bryant, 2017). For example, both Nevada (Nev. 372A.110, 2015) and Rhode Island (RI Gen Laws 44-67-11, 2016) appropriate revenue from marijuana directly to the state’s general fund. Figure 1 provides an overview of current marijuana legalization policies across the US. Connecting this to the conceptual framework of policy diffusion, states who gain revenue from legalized marijuana may influence legalization in other states.
Policy Mechanism
Data • 1991-2017 data from the National Associate of State Budget Officers’
(NASBO) annual state expenditure report • State-level factors from the Bureau of Economic Analysis, Bureau of
Labor Statistics, and Carl Klarner and National Conference of State Legislatures
• Policy adoptions from primary sourcing
Empirical Strategy To estimate the overall impact of the adoption of marijuana legalization polices, we used a generalized difference-in-difference (GDiD) model. This is similar to approaches from Dynarski (2000), Hillman, Tandberg, & Gross (2014), and Zhang & Ness, (2010) and accounts for the varying adoption period that a traditional DiD approach cannot. The causal estimates from our specification are approximated through a two-way fixed-effects model (Bertrand, Duflo, & Mullainathan, 2004). Additionally, we capitalize on changes in marijuana legislation with states (expansion from medical to recreational) to further test the impact of the policy on education funding.
Data and Methods
Our research aims to estimate the impact of marijuana legalization policies on state funding for education. As state higher education funding is viewed as discretionary, increases in state revenues should be linked in corresponding increase in higher education support. This study is guided by the following research questions:
1. To what extent does the introduction of marijuana legalization policies impact state support for public higher education?
2. Do medical versus recreational polices have a differing effect on education funding increases?
Research Questions Results (Cont.) Table 2 provides the estimates from GDiD specification. The adoption of the medically approval marijuana did not significantly impact total state revenues nor pass-through for higher education expenditures. However, when we interact the adoption of medical marijuana policies with the adoption of recreationally marijuana policy we find a statically significant (p<0.10) effect on total higher education expenditures. The additional expenditures appear to be concentrated in “Other State Funds” which are typically special tax provisions and revenues sources –of which revenues from marijuana sales would be primarily concentrated.
We ran a battery of falsifications checks, including prior policy year placebo effects and random policy assignment effects, and found no statistically significant effects.
ConclusionsFindings from this study suggest that the adoption of marijuana legalization policies only significantly impacts higher education expenditures as states move from medical only policies to medical and recreational policies. This brings into questions about the potential policy trade-offs associated with expanding legalized marijuana access as a mechanism to increase state revenues to support public higher education.
University of Florida, College of Education, Higher Education Administration & Policy, HEAP Graduate Student Travel Grant Award
Maryanne LongPh.D. Student
Higher Education Administration & PolicyUniversity of Florida
References available upon request
High(er) Education: Legalization of Marijuana and its Impact on Fiscal Support for Public Higher Education
Maryanne Long & Dennis A. Kramer II, Ph.D.
Results
Table 1 provides means and standard deviations for our two (2) primary outcomes – total state revenue and higher education expenditures before and after the policy. We compare states who: 1) never adopted; 2) only adopted medical provisions; and 3) adoption both medical and recreationally marijuana policies. Descriptively we find a widening gap between non-adopters and adoptions on both state revenue and higher education expenditures, with states adopting both medical and recreationally policy experiencing larger increase in both outcomes.
Total State Revenue Total Expenditures General Funds Federal Funds Other State Funds Bond Funds0.031 -0.003 -0.066 0.115 0.135 -0.097(0.062) (0.062) (0.054) (0.290) (0.156) (0.252)
0.132 0.337+ 0.077 -0.157 0.349+ -0.063(0.178) (0.178) (0.098) (1.212) (0.179) (0.181)
R-squared 0.889 0.605 0.466 0.171 0.273 0.107Number of Observations 4,840 1,201 1,201 1,137 1,175 840Number of Groups 344 51 51 51 51 51
State-Level Time Varying Covariates Yes Yes Yes Yes Yes YesState Fixed-Effects Yes Yes Yes Yes Yes YesYear Fixed-Effects Yes Yes Yes Yes Yes YesNotes. State clustered robust standard errors in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001
Table 2: Effects of Marijuana Policies on Higher Education Expenditures
Medical Marijuana
Medical * Recreational Marijuana
Higher Education Expenditures Fund Categories
Non- Adopters Non- Adopters
Total Total Difference Total Difference Total Total Difference Total Difference12,332.03 18,031.61 5,699.58 20,454.08 8,122.05 30,697.70 43,709.86 13,012.16 62,074.49 31,376.79
(8551.22) (17699.09) (29792.60) (28358.21) (39453.44) (87916.60)
1,735.84 1,413.54 -322.30 1,620.35 -115.49 4,617.31 3,080.85 -1,536.46 5,087.36 470.05(1240.68) (1188.31) (2271.44) (0.098) (4074.37) (2707.96) (6212.96)
# of States 22 22
Medical & Recreational
821 21 8
Table 1: Descriptives on Primary Outcomes
Total State Revenue (millions)
Higher Education Expenditures (millions)
Notes. State clustered robust standard errors in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001
Medical OnlyMedical &
Recreational
Pre- Policy (1996) Post Policy (2017)
Medical Only
Figure 1
Acknowledgements
Corresponding Author’s Information
LimitationsGiven recent adoptions, this study is limited by the number of treated states with recreational marijuana policy. Additionally, further analysis is needed to test the sensitivity of the estimates with the inclusion of additional covariates.
