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The Effect of Medical Marijuana Laws Legalization on US Drug Trafficking Crime

Evelina Gavrilova-Zoutman

Ph.D. in Economics from the University of Turin in 2014, is now an Associate Professor at NHH.

She is an expertise in Labour Economics Tax and Public Economics Economics of Crime. Her research interests include the economics of crime, assortative matching and taxation, enjoying tinkering with data and learning new strategies to detect crime with it. Publication: Is Legal Pot Crippling Mexican Drug Trafficking Organizations? The Effect of Medical Marijuana Laws on US Crime, A partner in crime: Assortative matching and bias in the crime market.

The Medical Marijuana Laws (MML) introduced new stake holders into the market, in the face of both supply and demand. From the side of supply, it became possible to cultivate marijuana and sell it via dispensaries, so both farmers and resellers entered the market. On the side of demand, there would be patients with for e.g. chronic pain who would otherwise consume prescribed opioids to control their pain. Now these patients could consume marijuana, if prescribed, with potentially less side effects. Without the presence of MML, these patients likely would not consume marijuana. On the other side of the border, demand for marijuana fell, which likely was reflected again in producers and resellers (cartels). The producers had to shift to other crops, likely, and resellers similarly would have to shift to other activities or disappear.

It is important to evaluate the broader welfare effects of MML and general marijuana legalization. It would be best to observe long-term outcomes for young people exposed to marijuana availability, in a quasi-random assignment setting. There are some pieces of the puzzle already available – there is no gateway effect where marijuana consumption leads to harder drug consumption. It is even found the opposite – that harder drugs are substituted for marijuana. It is interesting to determine what are the long-term health consequences of marijuana consumption. But likely from the perspective of legislators it is most important to determine (1) what is the effect of marijuana legalization on the health budget (extensive vs intensive margin: hospital admissions, required hospital care, drug prescription subsidies) (2) optimal tax policy – high taxation could disincentivize producers and lead to a rejuvenation of the illegal market. In addition, in some US states there is monitoring at the plant levels (which is costly) but prevents tax avoidance. One has to carefully evaluate what is the optimal tax policy and strike a good balance. One has to evaluate what is the optimal tax policy and strike a good balance.

Very likely the enforcement environment for marijuana didn’t change overnight, and it likely differed between police agencies. One such tension is very well documented as the differences between federal level and state-level policies, which could be then reflected in the individual police agency´s enforcement behavior. Producers and users could have immediately started to possess and consume marijuana, but law-enforcement didn’t have exact orders on how to deal with that, so better safe than sorry to arrest everyone involved in drug trafficking. It is well documented that upon MML legalization some states struggled to get their legislative toolbox in order, for e.g. in legislating how cultivation should be regulated. So, an efficient solution would be to have a clear legal framework before implementation and to communicate the penalties and allowances of this framework to all stakeholders.

However, these effects are barely significant, so very likely there is a variety of underlying responses that we imperfectly capture in one estimated coefficient, and it is unclear whether there is a problem requiring a solution.


Contactor: Fang Yaoyuan

Interviewer:Fang Yaoyuan

Proofreader:Long Yixun

Editor: Wang Yunjie

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