The Paycheck Protection Program & Small Business Performance: Evidence from Craft Breweries

Aaron J. Staples & Thomas P. Krumel Jr.

The Paycheck Protection Program (PPP) provided approximately $790 billion in relief funds to nearly 12 million small businesses experiencing economic damages from the COVID-19 pandemic. We use data from the craft beer industry to explore the role of PPP funding on small business performance. By merging an industry dataset of producers with data from the Small Business Administration on PPP loan recipients, we examine the relationship between PPP funding and remaining in operation and assess the role of such funding on year-over-year production volume changes. Results suggest that firms that received a PPP loan were more likely to remain in operation and experience a smaller decline in annual production than firms that did not receive funding. Further, using a quasi-experiment that exploits a natural break in the loan program, we demonstrate that the average decrease in YoY production was the smallest for breweries that received the earliest PPP funding, suggesting the timing of loan approval played a role in performance outcomes. These results provide preliminary evidence that the PPP achieved its desired objective, but questions remain about its distribution and causal effects.

CBD & THC: Who buys it, and why?

Aaron J. Staples, Brandon R. McFadden, & Trey Malone

The U.S. cannabis regulatory landscape has evolved dramatically over the past decade. The 2018 Farm Bill legalized hemp production, and nearly 20 states now have legal recreational marijuana. While the market for hemp and marijuana products are expanding, less is known about who uses the various cannabis-derived products, their reasons for use, and their product preferences. We surveyed 963 U.S. respondents to better understand the market demand for CBD and THC products. Using market segmentation based on self-reported consumption of CBD and THC, individual characteristics associated with CBD and THC consumers were examined as were the reasons for use and general preferences for cannabis products. Results suggest that age, subjective product knowledge, and regulatory preferences for legalized cannabis products were the best predictors of general cannabis usage, while gender was also a sufficient predictor for THC use. We also detected significant differences in reasons for product use and product preferences amongst CBD and THC users. Thus, while the CBD and THC markets were similar in some ways, there were also prevalent differences that merit further exploration.

Halo Effects in Alcohol Markets

Aaron J. Staples, Brenna Ellison, Vincenzina Caputo, & Trey Malone

Consumers habitually rely on food labels to make purchasing decisions, but they also use heuristics and other associations in judgment and decision-making. The halo effect, or the tendency to judge one product characteristic based on other product characteristics, is prevalent in food purchasing decisions. Using data from a panel of 1,087 beer and hard seltzer consumers across four metropolitan areas, we explore whether halo effects exist in the American alcohol marketplace. We create a hypothetical brewing company and ask consumers to rate various characteristics of the hypothetical brewery’s products. The experimental design isolates the effect of the organic label on a beer and hard seltzer to see whether consumers perceive the organic alternative as healthier than the conventional, non-organic alternative. Results provide some evidence of a health halo effect associated with the organic label on alcohol that varies by geographical region. Hard seltzers are also perceived as better tasting than beer, irrespective of the production status. This could lead to increased consumption in a fixed period, which is an area for future work.

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