By Study Shows Dispensary Openings Lift Nearby Business Activity
Recreational marijuana dispensaries can boost nearby businesses by increasing foot traffic, purchases and revenue, according to a new study. Researchers from the City University of New York, Northern Illinois University and University of Miami examined cannabis market growth, credit and debit card purchases and socioeconomic and demographic data in Illinois from 2021 through 2024.
The study found that “recreational dispensary openings increase the number of customers at nearby establishments by approximately 6.82%, transactions by 8.01%, and revenue by 7.47%.” The paper was published as a preprint by the Social Science Research Network (SSRN) ahead of potential publication in the journal Production and Operations Management.
The researchers reported that “following a dispensary opening, nearby establishments exhibit increases in customers, transactions, and revenue.” The economic gains are largely seen through what researchers call the extensive margin (customer traffic) as opposed to the intensive margin (purchasing frequency).
That is, while revenue per customer and per transaction was largely unaffected, the overall number of customers coming through the door and the overall amount of transactions did increase, the study found.
Not All Neighbors Benefit Equally
The study also found that not all businesses near a new marijuana dispensary see the same benefits. Food and beverage establishments as well as essential retailers saw “significant gains,” while non-essential retailers saw no major changes.
“Food, beverages, and routinely purchased goods can be incorporated into a destination-oriented trip with relatively little additional planning or search,” the paper said. “Many non-essential purchases require a more specific need or greater expenditure commitment.
Study Details
The research drew on cannabis market growth data, credit and debit card purchases and socioeconomic and demographic data covering Illinois from 2021 through 2024. The authors examined how recreational dispensary openings affected customer counts, transactions and revenue at nearby establishments.
The study was published as a preprint by the Social Science Research Network (SSRN) ahead of potential publication in the journal Production and Operations Management. The researchers concluded that recreational dispensary openings increase the number of customers at nearby establishments by approximately 6.82%, transactions by 8.01%, and revenue by 7.47%.
