The past three decades have witnessed a tremendous shift in public health policies toward marijuana legalization in the United States. Adopting the process‐based view of innovation, we hypothesize that marijuana's increased use and related consequences after its legalization affect innovators’ behavior and social environment during the innovation process, which in turn impacts regional innovation. Utilizing the staggered adoption of medical marijuana laws (MMLs) by 20 states between 1996 and 2013 as a quasi‐experimental setting, we find that legalizing medical marijuana reduces the overall output of regional innovation as proxied by patents’ total forward‐citation count aggregated by innovator location. Further analyses decomposing the overall output into patent quantity and quality reveal that the quantity of certain patents rises after states’ medical marijuana legalization. More importantly, these analyses show that the quality of all patents, especially that of “hit” patents, deteriorates, leading to a net negative effect on the overall output. These tests further suggest that different findings concerning patent quantity and quality are related to marijuana legalization's diverse influence on innovators’ individual and collaborative effectiveness during the innovation process. The decline in innovation output and quality after the adoption of MMLs is robust to the use of additional identification strategies. The evidence suggests that legalizing medical marijuana has an adverse effect on regional innovation activity.
AcsZ. J.AnselinL.VargaA. (2002). Patents and innovation counts as measures of regional production of new knowledge. Research Policy, 31(7), 1069–1085. https://doi.org/10.1016/S0048‐7333(01)00184‐6
2.
AgrawalA.CockburnI.GalassoA.OettlA. (2014). Why are some regions more innovative than others? The role of small firms in the presence of large labs. Journal of Urban Economics, 81, 149–165. https://doi.org/10.1016/j.jue.2014.03.003
3.
AgrawalA.GalassoA.OettlA. (2017). Roads and innovation. Review of Economics and Statistics, 99(3), 417–434. https://doi.org/10.1162/REST_a_00619
AmabileT. M.ContiR.CoonH.LazenbyJ.HerronM. (1996). Assessing the work environment for creativity. Academy of Management Journal, 39(5), 1154–1184. https://doi.org/10.2307/256995
6.
AndersonN.PotocnikK.ZhouJ. (2014). Innovation and creativity in organizations: A state‐of‐the‐science review, prospective commentary, and guiding framework. Journal of Management, 40(5), 1297–1333. https://doi.org/10.1177/0149206314527128
7.
AndrewsM. (2019). Bar talk: Informal social interactions, alcohol prohibition, and invention. (Working Paper No. 3489466), SSRN.
8.
AutorD.DornD.KatzL. F.PattersonC.Van ReenenJ. (2020). The fall of the labor share and the rise of superstar firms. Quarterly Journal of Economics, 135(2), 645–709. https://doi.org/10.1093/qje/qjaa004
9.
AzofeifaA.MattsonM. E.SchauerG.McAfeeT.GrantA.LyerlaR. (2016). National estimates of marijuana use and related indicators—National Survey on Drug Use and Health, United States, 2002–2014. Morbidity and Mortality Weekly Report: Surveillance Summaries, 65(11), 1–25.
10.
AzoulayP.ZivinJ. S. G.WangJ. L. (2010). Superstar extinction. Quarterly Journal of Economics, 125(2), 549–589. https://doi.org/10.1162/qjec.2010.125.2.549
11.
BaggioM.ChongA.SimonD. (2020). Sex, marijuana and baby booms. Journal of Health Economics, 70, 102283. https://doi.org/10.1016/j.jhealeco.2019.102283
12.
BarberB.IV.DiestreL. (2019). Pushing for speed or scope? Pharmaceutical lobbying and Food and Drug Administration drug review. Strategic Management Journal, 40(8), 1194–1218.
13.
BaronR. M.KennyD. A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173. https://doi.org/10.1037/0022‐3514.51.6.1173
14.
BarronF.HarringtonD. M. (1981). Creativity, intelligence, and personality. Annual Review of Psychology, 32(1), 439–476. https://doi.org/10.1146/annurev.ps.32.020181.002255
15.
BasadurM.GraenG. B.GreenS. G. (1982). Training in creative problem‐solving—effects on ideation and problem finding and solving in an industrial‐research organization. Organizational Behavior and Human Performance, 30(1), 41–70. https://doi.org/10.1016/0030‐5073(82)90233‐1
16.
BeckerG. S.MurphyK. M. (1988). A theory of rational addiction. Journal of Political Economy, 96(4), 675–700. https://doi.org/10.1086/261558
17.
BrookJ. S.LeeJ. Y.FinchS. J.SeltzerN.BrookD. W. (2013). Adult work commitment, financial stability, and social environment as related to trajectories of marijuana use beginning in adolescence. Substance Abuse, 34(3), 298–305. https://doi.org/10.1080/08897077.2013.775092
18.
BrownJ. S.DuguidP. (2001). Knowledge and organization: A social‐practice perspective. Organization Science, 12(2), 198–213. https://doi.org/10.1287/orsc.12.2.198.10116
19.
CerdaM.WallM.KeyesK. M.GaleaS.HasinD. (2012). Medical marijuana laws in 50 states: Investigating the relationship between state legalization of medical marijuana and marijuana use, abuse and dependence. Drug and Alcohol Dependence, 120(1‐3), 22–27. https://doi.org/10.1016/j.drugalcdep.2011.06.011
20.
ChengS. F.De FrancoG.LinP. (2022). Marijuana liberalization and public finance: A capital market perspective on the passage of medical use laws. Journal of Accounting and Economics. Advance online publication. https://doi.org/10.1016/j.jacceco.2022.101516
21.
ChuY. W. L.GershensonS. (2018). High times: The effect of medical marijuana laws on student time use. Economics of Education Review, 66, 142–153. https://doi.org/10.1016/j.econedurev.2018.08.003
22.
ColzatoL. S.OzturkA.HommelB. (2012). Meditate to create: The impact of focused‐attention and open‐monitoring training on convergent and divergent thinking. Frontiers in Psychology, 3, 116. https://doi.org/10.3389/fpsyg.2012.00116
23.
CurranV. H.BrignellC.FletcherS.MiddletonP.HenryJ. (2002). Cognitive and subjective dose‐response effects of acute oral Δ9‐tetrahydrocannabinol (THC) in infrequent cannabis users. Psychopharmacology, 164(1), 61–70. https://doi.org/10.1007/s00213‐002‐1169‐0
24.
EbadiY. M.UtterbackJ. M. (1984). The effects of communication on technological innovation. Management Science, 30(5), 572–585. https://doi.org/10.1287/mnsc.30.5.572
25.
EndresM.BoehnkeK.WeimerW. (2022). Hashing it out: A survey of programmers’ cannabis usage, perception, and motivation. Proceedings of the 44th International Conference on Software Engineering, Pittsburg, PA (pp. 1107–1119).
26.
FinkT. M. A.ReevesM.PalmaR.FarrR. S. (2017). Serendipity and strategy in rapid innovation. Nature Communications, 8, 1–9. https://doi.org/10.1038/s41467‐017‐02042‐w
FloridaR.MellanderC.StolarickK. (2008). Inside the black box of regional development—human capital, the creative class and tolerance. Journal of Economic Geography, 8(5), 615–649. https://doi.org/10.1093/jeg/lbn023
30.
FoltinR. W.BradyJ. V.FischmanM. W.EmurianC. S.DominitzJ. (1987). Effects of smoked marijuana on social‐interaction in small‐groups. Drug and Alcohol Dependence, 20(1), 87–93. https://doi.org/10.1016/0376‐8716(87)90079‐2
31.
FuhrmansV. (2018, September 8). Can CEOs get away with smoking pot?The Wall Street Journal. https://www.wsj.com/articles/marijuana‐legalization‐loosens‐constraints‐on‐ceos‐to‐an‐extent‐1536422426
32.
GaimonC.HoraM.RamachandranK. (2017). Towards building multidisciplinary knowledge on management of technology: An introduction to the special issue. Production and Operations Management, 26(4), 567–578. https://doi.org/10.1111/poms.12668
33.
GalenianosM.PaculaR. L.PersicoN. (2012). A search‐theoretic model of the retail market for illicit drugs. Review of Economic Studies, 79(3), 1239–1269. https://doi.org/10.1093/restud/rds007
34.
GancoM. (2017). NK model as a representation of innovative search. Research Policy, 46(10), 1783–1800. https://doi.org/10.1016/j.respol.2017.08.009
35.
GaoH. S.HsuP. H.LiK.ZhangJ. (2020). The real effect of smoking bans: Evidence from corporate innovation. Journal of Financial and Quantitative Analysis, 55(2), 387–427. https://doi.org/10.1017/S0022109018001564
36.
GeeK. (2019, April 11). Drug tests show marijuana use at 14‐year high among workers. The Wall Street Journal. https://www.wsj.com/articles/drug‐tests‐show‐marijuana‐use‐at‐14‐year‐high‐among‐workers‐11554975001
37.
GodfreyP. C.MerrillC. B.HansenJ. M. (2009). The relationship between corporate social responsibility and shareholder value: An empirical test of the risk management hypothesis. Strategic Management Journal, 30(4), 425–445. https://doi.org/10.1002/smj.750
GreenB.KavanaghD.YoungR. (2003). Being stoned: A review of self‐reported cannabis effects. Drug and Alcohol Review, 22(4), 453–460. https://doi.org/10.1080/09595230310001613976
40.
GrossmanM. (2005). Individual behaviours and substance use: The role of price. Advances in Health Economics and Health Services Research, 16, 15–39. https://doi.org/10.1016/S0731‐2199(05)16002‐6
41.
GublerT.LarkinI.PierceL. (2018). Doing well by making well: The impact of corporate wellness programs on employee productivity. Management Science, 64(11), 4967–4987. https://doi.org/10.1287/mnsc.2017.2883
42.
HahnJ. Y.ToddP.Van der KlaauwW. (2001). Identification and estimation of treatment effects with a regression‐discontinuity design. Econometrica, 69(1), 201–209. https://doi.org/10.1111/1468‐0262.00183
43.
Haines‐SaahR. J.MoffatB.JenkinsE. K.JohnsonJ. L. (2014). The influences of health beliefs and identity on adolescent marijuana and tobacco co‐use. Qualitative Health Research, 24(7), 946–956. https://doi.org/10.1177/1049732314539854
44.
HallB. H.JaffeA.TrajtenbergM. (2005). Market value and patent citations. Rand Journal of Economics, 36(1), 16–38.
45.
HallB. H.JaffeA. B.TrajtenbergM. (2001). The NBER U.S. patent citations data file: Lessons, insights, and methodological tools. (Working Paper No. 8498), National Bureau of Economic Research, Cambridge, MA. http://www.nber.org/papers/w8498.pdf
46.
HargadonA. B.BechkyB. A. (2006). When collections of creatives become creative collectives: A field study of problem solving at work. Organization Science, 17(4), 484–500. https://doi.org/10.1287/orsc.1060.0200
47.
HasanS.KoningR. (2019). Conversations and idea generation: Evidence from a field experiment. Research Policy, 48(9), 103811. https://doi.org/10.1016/j.respol.2019.103811
48.
HasinD. S.SarvetA. L.CerdaM.KeyesK. M.StohlM.GaleaS.WallM. M. (2017). US adult illicit cannabis use, cannabis use disorder, and medical marijuana laws 1991–1992 to 2012–2013. Jama Psychiatry, 74(6), 579–588. https://doi.org/10.1001/jamapsychiatry.2017.0724
49.
HolyoakK. J.ThagardP. (1995). Mental leaps: Analogy in creative thought. MIT Press.
50.
HommelB. (2012). Convergent and divergent operations in cognitive search. In ToddP. M.HillsT. T.RobbinsTrevor W. (Eds.), Cognitive search: Evolution, algorithms, and the brain (pp. 221–235). MIT Press.
51.
HongY. L.ShaoB. B. M. (2020). On factors that moderate the effect of buyer‐supplier experience on e‐procurement platforms. Production and Operations Management, 30(4), 1034–1051. https://doi.org/10.1111/poms.13291
52.
JaffeA. B.TrajtenbergM. (2002). Patents, citations, and innovations: A window on the knowledge economy. MIT Press.
53.
JaffeA. B.TrajtenbergM.HendersonR. (1993). Geographic localization of knowledge spillovers as evidenced by patent citations. Quarterly Journal of Economics, 108(3), 577–598. https://doi.org/10.2307/2118401
54.
KanterR. M. (1988). When a thousand flowers bloom: Structural, collective, and social conditions for innovation in organizations. Knowledge Management and Organisational Design, 10(1), 93–131.
55.
KauffmanS.LevinS. (1987). Towards a general theory of adaptive walks on rugged landscapes. Journal of Theoretical Biology, 128(1), 11–45. https://doi.org/10.1016/S0022‐5193(87)80029‐2
56.
KimY. K.OhJ. B. (2017). Examination workloads, grant decision bias and examination quality of patent office. Research Policy, 46(5), 1005–1019. https://doi.org/10.1016/j.respol.2017.03.007
57.
KilmerB.MacCounR. J. (2017). How medical marijuana smoothed the transition to marijuana legalization in the United States. Annual Review of Law and Social Science, 13, 181–202. https://doi.org/10.1146/annurev‐lawsocsci‐110615‐084851
58.
KuepperR.CeccariniJ.LatasterJ.vanOsJ.vanKroonenburghM.vanGervenJ. M.MarcelisM.Van LaereK.HenquetC. (2013). Delta‐9‐tetrahydrocannabinol‐induced dopamine release as a function of psychosis risk: 18F‐fallypride positron emission tomography study. Plos One, 8(7), e70378. https://doi.org/10.1371/journal.pone.0070378
LiZ.HongY.ZhangZ. (2021). The empowering and competition effects of the platform‐based sharing economy on the supply and demand sides of the labor market. Journal of Management Information Systems, 38(1), 140–165. https://doi.org/10.1080/07421222.2021.1870387
LiuJ. Y.BharadwajaA. (2020). Drug abuse and the Internet: Evidence from Craigslist. Management Science, 66(5), 2040–2049. https://doi.org/10.1287/mnsc.2019.3479
63.
LoftonJ. (2019). Law enforcement problems associated with medical marijuana legalization: A Missouri perspective. Missouri Medicine, 116(4), 265.
64.
LoveD. (2013, August 23). Meet the science and tech geniuses who got high and solved amazing problems. The Business Insider. https://www.businessinsider.com/scientists‐and‐geniuses‐who‐used‐drugs‐2013‐8
65.
MarieO.ZolitzU. (2017). “High” Achievers? Cannabis access and academic performance. Review of Economic Studies, 84(3), 1210–1237.
66.
McGintyE. E.NiederdeppeJ.HeleyK.BarryC. L. (2017). Public perceptions of arguments supporting and opposing recreational marijuana legalization. Preventive Medicine, 99, 80–86. https://doi.org/10.1016/j.ypmed.2017.01.024
67.
MoserP.VoenaA.WaldingerF. (2014). German Jewish emigres and US invention. American Economic Review, 104(10), 3222–3255. https://doi.org/10.1257/aer.104.10.3222
68.
NandaR.NicholasT. (2014). Did bank distress stifle innovation during the Great Depression?Journal of Financial Economics, 114(2), 273–292. https://doi.org/10.1016/j.jfineco.2014.07.006
OldhamG. R.CummingsA. (1996). Employee creativity: Personal and contextual factors at work. Academy of Management Journal, 39(3), 607–634. https://doi.org/10.2307/256657
71.
OuimetP.SimintziE.YeK. (2021). The impact of the opioid crisis on firm value and investment. Available at SSRN 3338083.
72.
PaculaR. L.PowellD.HeatonP.SevignyE. L. (2015). Assessing the effects of medical marijuana laws on marijuana use: The devil is in the details. Journal of Policy Analysis and Management, 34(1), 7–31. https://doi.org/10.1002/pam.21804
73.
PagellM.ParkinsonM.VeltriA.GrayJ.WiengartenF.LouisM.FynesB. (2020). The tension between worker safety and organization survival. Management Science, 66(10), 4863–4878. https://doi.org/10.1287/mnsc.2020.3589
74.
PicardP. M.de laPotterieB. V. P. (2013). Patent office governance and patent examination quality. Journal of Public Economics, 104, 14–25. https://doi.org/10.1016/j.jpubeco.2013.04.009
75.
PreacherK. J.HayesA. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40(3), 879–891. https://doi.org/10.3758/BRM.40.3.879
76.
QiuL. F.KumarS. (2017). Understanding voluntary knowledge provision and content contribution through a social‐media‐based prediction market: A field experiment. Information Systems Research, 28(3), 529–546. https://doi.org/10.1287/isre.2016.0679
77.
RosenbergN.NathanR. (1982). Inside the black box: Technology and economics. Cambridge University Press.
78.
SAMHSA. (2018). Results from the 2010 National Survey on Drug Use and Health: Detailed tables prevalence estimates, standard errors, P values, and sample sizes. NSDUH Series H‐41, HHS Publication No. (SMA) 11‐4658. Rockville, MD, Substance Abuse and Mental Health Services Administration.
79.
SampatB. N.ZiedonisA. A. (2004). Patent citations and the economic value of patents. In MoedH. F.SchmochU.GlänzelW. (Eds.), Handbook of quantitative science and technology research (pp. 277–298). Springer.
80.
SchaferG.FeildingA.MorganC. J.AgathangelouM.FreemanT. P.CurranH. V. (2012). Investigating the interaction between schizotypy, divergent thinking and cannabis use. Consciousness and Cognition, 21(1), 292–298. https://doi.org/10.1016/j.concog.2011.11.009
81.
SchumpeterJ. A. (1935). The analysis of economic change. The Review of Economics and Statistics, 17(4), 2–10. https://doi.org/10.2307/1927845
82.
SearsJ.HoetkerG. (2014). Technological overlap, technological capabilities, and resource recombination in technological acquisitions. Strategic Management Journal, 35(1), 48–67. https://doi.org/10.1002/smj.2083
83.
ShalleyC. E.ZhouJ.OldhamG. R. (2004). The effects of personal and contextual characteristics on creativity: Where should we go from here?Journal of Management, 30(6), 933–958. https://doi.org/10.1016/j.jm.2004.06.007
84.
SimontonD. K. (2018). Defining creativity: Don't we also need to define what is not creative?The Journal of Creative Behavior, 52(1), 80–90. https://doi.org/10.1002/jocb.137
85.
SinghJ.FlemingL. (2010). Lone inventors as sources of breakthroughs: Myth or reality?Management Science, 56(1), 41–56. https://doi.org/10.1287/mnsc.1090.1072
86.
SobelM. E. (1982). Asymptotic confidence intervals for indirect effects in structural equation models. Sociological Methodology, 13, 290–312. https://doi.org/10.2307/270723
VakiliK.McGahanA. M. (2016). Health care's grand challenge: Stimulating basic science on diseases that primarily afflict the poor. Academy of Management Journal, 59(6), 1917–1939. https://doi.org/10.5465/amj.2015.0641
89.
VakiliK.ZhangL. (2018). High on creativity: The impact of social liberalization policies on innovation. Strategic Management Journal, 39(7), 1860–1886. https://doi.org/10.1002/smj.2778
90.
Van de VenA. H. (1986). Central problems in the management of innovation. Management Science, 32(5), 590–607. https://doi.org/10.1287/mnsc.32.5.590
91.
Van der VegtG. S.JanssenO. (2003). Joint impact of interdependence and group diversity on innovation. Journal of Management, 29(5), 729–751. https://doi.org/10.1016/S0149‐2063_03_00033‐3
92.
VaragurK. (2021, September 29). Is it ever OK to get stoned with a client? And other questions as pot comes to work. The Wall Street Journal. https://www.wsj.com/articles/is‐it‐ever‐ok‐to‐get‐stoned‐with‐a‐client‐and‐other‐questions‐as‐pot‐comes‐to‐work‐11632907802
93.
VolkowN. D.BalerR. D.ComptonW. M.WeissS. R. B. (2014). Adverse health effects of marijuana use. New England Journal of Medicine, 370(23), 2219–2227. https://doi.org/10.1056/NEJMra1402309
94.
WenH. F.HockenberryJ. M.CummingsJ. R. (2015). The effect of medical marijuana laws on adolescent and adult use of marijuana, alcohol, and other substances. Journal of Health Economics, 42, 64–80. https://doi.org/10.1016/j.jhealeco.2015.03.007
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
