(Pot)Heads in Beds: The Effect of Marijuana Legalization on Hotel Occupancy in Colorado and Washington

This paper uses monthly hotel occupancy data to examine the effect of marijuana legalization on tourism

in Colorado and Washington. The results indicate a large increase in hotel rooms rented in Colorado,

with a considerably smaller effect for Washington. The effects are larger in both states once commercial

sale is permitted above and beyond legalizing possession and individual cultivation.

1 Introduction

In November 2012, voters in Colorado and Washington approved statewide referenda legalizing the personal possession and recreational use of marijuana, subject to a regulatory framework similar to those for alcohol and tobacco. Marijuana remained illegal at the federal level as a Schedule I controlled substance, but Colorado’s Amendment 64 and Washington’s Initiative 502 effectively created a patchwork legal status for marijuana within the United States. While the U.S. Constitution establishes the supremacy of federal law and thus marijuana’s de jure status, an August 2013 memo from the Department of Justice institutes

defacto legal status for individuals and licensed distributors in states that lift prohibition while maintaining

adequate regulations (Dennis, 2013). Thus the legal usage of marijuana has become an exclusive privilege

defined by geographic boundaries.

It is easy to see the implications marijuana legalization might have for tourism. Amsterdam’s permissive

legal tolerance of drugs (and other activities) attracts visitors from around the world, sometimes to the