Study: Legalization Caused $130M Revenue Boost at Denver Hotels

A Penn State University study found that cannabis legalization led to an immediate increase of $130 million in revenue for hotels in Denver, Colorado. Researcher John O’Neill, a hospitality management professor at Penn State who conducted the study, said the effect only lasted about a year and was also partly due to an increase in post-legalization hotel prices.

“We found that Denver hotels were able to charge and receive higher prices for hotel rooms following recreational marijuana legalization, and also found increased visitation to the Denver area with growth in occupied hotel rooms of 9 percent in 2014, higher than any other year we studied, resulting in positive economic impact.” – O’Neill to Penn State News

The study also found the positive effects were more pronounced in tourist-oriented, lower-priced hotels than in higher-priced hotels that typically cater to commercial travelers. Additionally, those positive effects were unrelated to the distance between hotels and recreational dispensaries but “hotels generally located in the neighborhoods and areas of the city where dispensaries are located experienced the most positive effects,” O’Neill said in the report.

O’Neill explained that while the study was conducted during a period of economic growth overall in the U.S, Denver‘s growth after legalization “was above and beyond what would have been otherwise expected without legal recreational marijuana.”

“In addition, its growth was greater than comparable cities, such as Albuquerque, Austin and Salt Lake City. Also, its growth was greater than national averages,” he said. “I believe the difference in hotel revenues was due to the legalization of recreational marijuana in Denver.”

The study, which was conducted using STR hotel data, geo-coordinates and opening dates of recreational dispensaries, appeared in the Journal of Real Estate Literature.