Bucking a Trend: Cannabis Turns Heads in Maine

Social Sciences5 MIN READ

An economic study illustrates the impact of an emerging industry while educating the public and policymakers

Economist Michael Donihue and student researchers Owen Boyd ’23 and Zijing “Yvette” Gu ’22 created and analyzed a one-of-a-kind dataset to generate the first detailed economic study of Maine’s recreational marijuana industry.
By Laura MeaderPhotography by Caitlin Penna
April 4, 2022

For generations, Maine’s leading cash crops have been wild blueberries and Aroostook County potatoes. Now there’s a new kid on the block. Cannabis.

In 2020 medical cannabis sales in Maine—$266 million, according to Maine Revenue Services—surpassed those of both potatoes and blueberries. “Marijuana has grown to become Maine’s most valuable crop,” a Portland Press Herald headline announced in December that year. The news piqued economist Michael Donihue’s curiosity.

What did this mean? How did it happen? What about recreational marijuana?

For answers, Donihue, Colby’s Herbert E. Wadsworth Professor in Economics, turned to the Colby Laboratory for Economic Studies, a collaborative research workshop he oversees. Last summer Donihue and student researchers Owen Boyd ’23 and Zijing “Yvette” Gu ’22 created and analyzed a one-of-a-kind dataset to generate the first detailed economic study of Maine’s recreational marijuana industry.

The interactive report covers five components of one of Maine’s emerging industries, and it includes some eye-popping numbers.

In its first year of legalized sales, recreational marijuana generated:

  • $58.5 million in sales revenue;
  • $8.8 million in sales and excise tax revenue;
  • $65 million from direct and indirect spending by businesses and employees associated with the industry.

What surprised Donihue most was how rapidly the industry grew. In a month-to-month comparison, sales jumped from $1 million in October 2020, the first month that sales began, to $10 million in September 2021.

“What all this tells us,” said Donihue, “is that Maine’s experience with recreational marijuana has been a success on many fronts, certainly in terms of raising a lot of revenue.”

But has it been successful across the board? What about the social implications and environmental concerns associated with its cultivation?

Donihue undertook his project as part of a larger interdisciplinary study instigated by Associate Professor of Anthropology Winifred Tate, a political anthropologist who directs the Maine Drug Policy Lab at Colby College. Tate convened Colby faculty for her Maine Cannabis Cultivation Working Group to investigate the social, economic, and environmental consequences of legalized marijuana in Maine.

With funding from President David A. Greene’s office, Tate, Donihue, and the Environmental Studies Department hired student researchers last summer to begin that investigation. While the pandemic has delayed both Tate’s and the environmental studies’ research, Donihue’s study is an important first step. It’s the first of what Tate envisions as a “deep and wide-ranging analysis of the transformations being wrought by this new mode of production.”

Follow the Money

Initially, Donihue wanted to understand the industry by “following the money,” or tracing the supply chain. “Basically, how does it get from a seed to a pipe or a gummy bear?” he asked. “What are the steps along the way? Who’s executing them? What are the costs associated with each step?”

In 2017 Donihue conducted just such a study. His “Lobsters to Dollars” project detailed the lobster industry’s economic impact after the lobster leaves the wharf. But unlike lobster dealers and processors, Donihue couldn’t get owners of recreational marijuana retail stores to talk. He shrugged it off to the busyness of starting a new enterprise. Or maybe, he wondered, it’s the complexities of operating a business that’s legal in Maine but illegal federally that made them reluctant to talk to an economics researcher.

His team had to pivot. Boyd and Gu combed through websites, online forums, and papers. They turned to Maine’s Office of Marijuana Policy and read statutes and rules. They obtained retail sales numbers from the Maine Revenue Service and labor statistics from the Labor Department. It was a lot of connecting the dots, Gu said, synthesizing, and analyzing.

Zijing “Yvette” Gu ’22 drew upon her experience with the digital storytelling platform StoryMaps to create an interactive website to report the team’s findings.

Their final report, in keeping with the educational outreach mission of Donihue’s lab, is visually alluring and easy to understand. Using digital storytelling and data visualization, the report informs without economics jargon and complicated charts. It also includes a detailed supply chain that Donihue believes no one has previously pieced together.

“I think the approach we took is probably going to be very important,” said Gu, a native of Sichuan, China. “Without effective communication, the work that we did isn’t going to have a lot of impact. And personally, I don’t think telling the story in a simple way is undermining efforts. It’s the opposite, actually.”

Gu, an economics major concentrating in financial markets, had previous experience using the digital storytelling platform StoryMaps from art history classes. She was thrilled to bring that skill to an economics project, her two interests colliding in true interdisciplinary style. She’s contributed something meaningful to a larger conversation, she said, and gained transferable skills to use in graduate school.

That’s exactly the goal of Donihue’s Laboratory for Economics Studies: engaging students in policy-relevant research that applies classroom lessons to real-world policy issues. That policymakers and the public can also benefit from the lab’s research is an added bonus.

Perks of Interdisciplinary Research

Gu came into this project with an open mind, drawn to how the conversation about marijuana differs in the United States and China, where marijuana and other psychoactive substances are legally prohibited and socially unacceptable.

Working with an interdisciplinary cohort of students looking at the issue through economic, social, and environmental lenses brought home its complexity. “We were studying the same topic from different perspectives and using different toolkits,” said Gu. “And that gave us totally different attitudes toward legalization.” 

Thinking broadly about issues “doesn’t necessarily make things easier. But I think complication is good in this case. It’s one of the perks of interdisciplinary study.”

Yvette Gu ’22

Tate agrees. “These cohort models are really important ways to bring students together to think through the ways that they can learn from each other.”

It’s a model that researchers, the public, and policymakers should adopt too. Because as Donihue points out, the recreational marijuana industry is “still a relatively new and dynamic industry going through a lot of growing pains.”

The hope is that Colby’s interdisciplinary research can help ease those pains during this moment of transformation as cannabis claims its piece of Maine’s economic pie.

Stores selling adult-use cannabis are now part of the landscape in the 47 Maine towns that allow recreational marijuana retailers.