Marijuana Prohibition and Rent Seeking

R. Warren Anderson ()
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R. Warren Anderson: University of Michigan-Dearborn

Homo Oeconomicus: Journal of Behavioral and Institutional Economics, 2017, vol. 34, issue 1, No 3, 33-46

Abstract: Abstract A popular theory explains that marijuana’s criminalization resulted from DuPont’s lobbying as DuPont viewed hemp as competition for their products and was politically connected. To test the effects of this rent seeking story I analyze DuPont’s stock price. Initially, Congress taxed marijuana at a prohibitive level instead of an outright ban on consumption. Such legislative authority of prohibitive taxation remained in question until a Supreme Court decision in March 1937. DuPont’s Sharpe Ratio saw a break in trend immediately upon this ruling. However, in a panel dataset the effects of the ruling are found to be highly insignificant. While DuPont may have gained from marijuana’s criminalization, ultimately it was not reflected in its stock price.

Keywords: Rent seeking; Marijuana; DuPont; Stock (search for similar items in EconPapers)
JEL-codes: D72 G10 N12 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s41412-017-0037-4

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