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Taxing Marijuana and the Road to Reparations:  Comparing the Colorado and Illinois Cannabis Markets

By Tommaso Carlo Filippo Babucci  

Although still prohibited at the federal level, cannabis can now be found on the shelves of recreational dispensaries across thirty-three U.S states. This thesis examines the development of this legal market from both historical and empirical perspectives.  Using a new data set, it estimates the determinants of cannabis sales and tax revenues in the Colorado market and analyzes the incidence of a single tax increase. The results, which suggest that legal cannabis behaves like a luxury good, are used to analyze the potential for cannabis-funded reparations programs in Illinois, which recently approved recreational sales of cannabis.

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Advisors: Professor Connel Fullenkamp | JEL Codes: H2, R50, L15

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