Cannabis on a legalized market

The aim is to specify a demand function that describes the demand for cannabis on county level in the states that have legalized retail sales in order to test hypotheses regarding what factors influence demand on county and potentially on individual level, as well as to gain some insight in whether legalization is a good strategy for combatting black markets of cannabis. Multiple regression analysis is used to estimate the specification with use of 48 observations. 9 hypotheses are tried in order to see what explanatory variables could help explain sales revenue. The main conclusions is that retail sales is positively significantly explained by the county characteristics of tourism, education, size of the population, share of smokers, share of population between 18-65, and negatively by the share of the population that consumes alcohol to a large extent. Sales are highly explained by these characteristics on county level but it is harder to tell if the effects on individual level are representative. However, individual level research supports the outcome of the results on county level. In the short run legalization supplies a small segment of the cannabis market, and time will tell if and by how much retail prices decrease in order to be competitive with the black and grey markets. The specification has some clear issues that should be dealt with before drawing scientific conclusions of the results