How has cannabis legalization influenced the hospitality industry? This is what a recent study published in Production and Operations Management hopes to address as a team of researchers investigated how cannabis legalization in Colorado has impacted hotel revenues across the state. This study has the potential to help researcher, legislators, and the public better understand the financial and logistical benefits of legalizing cannabis across the United States.
For the study, the researchers used a series of statistical models to analyze how cannabis legalization in Colorado has impacted hotel operations, specifically revenue, and evaluated distance to a cannabis dispensary, hotel age, location, class, and operating structure. In the end, the researchers found that cannabis legalization resulted in a 25.2 percent increase in hotel revenues resulting from increases in room night bookings and daily room rates by 7.9 percent and 16 percent, respectively. The team also found that these numbers were higher in hotels that were based closer to cannabis dispensaries.
The study states, “Hotels that are closer to retail dispensaries, have been operating for shorter periods, and belong to a higher class obtain more positive effects. The type of location also plays a crucial role, with hotels in resort areas benefiting the most from retail dispensary legalization, followed by those in urban, airport, suburban, interstate, and small-town locations.”
Medical cannabis was legalized in Colorado in 2000, and recreational cannabis was legalized in 2012 for adults 21 of age and over, the latter of which went into effect on January 1, 2014. They became the first state to legalize recreational cannabis for adult use, paving the way for other states to follow suit.
What new connections between cannabis legalization and hotel revenues will researchers make in the coming years and decades? Only time will tell, and this is why we science!
As always, keep doing science & keep looking up!
Sources: Production and Operations Management, Marijuana Moment