The Highs and Lows of Medical Marijuana Legalization

Starting 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 and evaluate the benefits and costs associated with legalizing medical marijuana. We investigate whether medical marijuana legalization affects substance use and criminal behavior among young adults. Using data from the National Longitudinal Survey of Youth 1997 Cohort, we apply a difference-in-difference approach to isolate the effect of medical marijuana legalization on individual-level self-reported 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 panel nature of this data set allows 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.

There are many reasons why a state may choose to legalize medical marijuana. An important consideration for states before legalizing medical marijuana is to analyze if the benefits of the drug outweigh the costs. Recent studies show that marijuana is a viable alternative to many pain medications and is more cost effective. Despite these benefits in legalizing medical marijuana, there are also potential drawbacks if the laws increase other substance use or crime rates. If the laws do increase crime rates, then this could lead to an increase in spending due to criminal justice system costs (costs associated with police funding and incarceration), crime career costs (opportunity costs associated with an individual’s choice to commit crime rather than have a legal job), and intangible costs (indirect costs for victims).

Previous studies of the effects of medical marijuana laws provide some evidence that legalizing marijuana is associated with increased substance abuse but not higher crime rates. This paper attempts to provide estimates of the effect of medical marijuana legalization on substance use and criminal behavior, and to the best of our knowledge, is one of the few papers to analyze the effect of these laws on individual-level, self-reported criminal behaviors other than substance use alone. This provides insight into criminal behavior that may go undetected by law enforcement. We also study if the impact of the law changes over the years since the year of enactment. Lastly, we incorporate the variance in behavior among the states by studying the difference between the state laws in terms of the possession limits, cultivation limits, and the presence of state dispensaries. Preliminary results show that legalizing medical marijuana does not affect consumption of marijuana, but it reduces smoking behavior and increases the use of other hard drugs.