Panel Paper: The Highs and Lows of Medical Marijuana Legalization

Saturday, November 10, 2018
8226 - Lobby Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Sanjukta Basu, Siobhan Innes-Gawn and Mary Penn, Tulane University

Beginning with California in 1996, twenty-nine states and the District of Columbia have legalized medical marijuana. Studies of the impact of these laws provide useful and timely evidence for state policymakers as they consider whether to legalize recreational marijuana. We investigate whether medical marijuana legalization affects substance use and criminal behavior among young adults. We use the 1997 cohort of the National Longitudinal Survey of Youth in a difference-in-difference approach to isolate the causal effect of medical marijuana legalization on individual criminal behaviors and consumption of substances, such as alcohol, marijuana, and hard drugs. The NLSY97 follows approximately 9,000 individuals, born between 1980 and 1984, from 1997 to the present. The 17 panels of the NLSY data set allow us to analyze self-reported criminal behavior over time, including whether the respondents consumed and/or sold marijuana or other hard drugs, whether they engaged in petty crimes such as property damage or theft, and whether and how many times they were arrested.

Previous studies of the effects of medical marijuana laws provide some evidence that legalization is correlated with increased substance abuse but not higher crime rates. This paper will contribute to the existing literature by analyzing the impact of legalizing medical marijuana at the state level taking into account the institutional variation of the marijuana laws in each state. The institutional variation in states differs in terms of possession limits, plant cultivation limits, laws regarding recreational use, and severity of penalties associated with illegal possession. The outcome variables are the frequency of individual consumption of licit and illicit drugs, arrests and criminal behavior. Our study is one of the few that provides causal estimates of the effect of medical marijuana legalization on substance use and criminal behavior, and to the best of our knowledge, is the first paper to analyze the effect of these laws on individual-level, self-reported criminal behaviors other than substance use. This provides insight into criminal behavior that may go undetected by law enforcement.

There are many policy implications for our research. If legalizing medical marijuana causes an increase (decrease) in crime rates or alcohol or illegal substance use, then this could lead to an increase (decrease) in state spending due to criminal justice system, health, fiscal, and welfare costs. If we find effects for medical marijuana laws, we expect the impact may be even larger if states pass recreational marijuana laws.