The Long-Run Effect of Geographically-Staggered Legalizations: Was There a First-Adopter Advantage for States That Legalized Beer More Quickly in 1933?

Abstract

Over the last two decades a geographically staggered-legalization of marijuana has commenced in the United States. Early-legalizing states may subsequently enjoy a first-mover advantage which will help them stake a long-run foothold in what may evolve into a national market. To gain insight, we examine another geographically-staggered legalization—that of 3.2 percent beer. Between April 1933 and May 1937 every state legalized the production and sale of beer. Indeed we find that those states that legalized beer earlier in this period had more breweries not just in the years immediately following legalization, but also in 1977, just prior to the beginning of the craft brewing movement in the US. This finding holds even when variables related to long-term brewing tradition are held constant.