Table E.1 compares estimates of the effects of growth in the legal market on past month use restricting the sample to only include Montana and its bordering states in Panel A, to the estimates using the entire sample of states in Panel B. If there are substantial supply spillovers from MML states with large markets to other states, then we would expect the effect sizes in Panel A to exceed those in Panel B. From Table E.1, for youths aged 12-25, the effects of legal market size on past-month use are larger in Panel A than in Panel B, but for adults aged 26 and older they are quite similar. This is consistent with growth in the legal medical marijuana market having supply spillovers across states in the black market, where adolescents and young adults have substantially greater access than older adults. Table E.2 replicates the analysis of Table E.1 using prevalence of past-year initiation as the outcome variable. The results are similar. Thus, there appear to be supply spillovers from medical marijuana markets to recreational marijuana markets used by youths in other states. The differences between the estimates from Montana’s case study to those using the entire sample suggests that the effects of medical marijuana market growth on adolescent and young adult use may be twice as large as shown in the primary results if cross-state supply spillovers are accounted for. If the decision to report marijuana use is more closely related to beliefs about legal penalties or social disapproval compared to availability,flood drain tray then the results from Table 2.8 suggest that the effects of legal market growth on adolescent marijuana use are a true measure of consumption changes and not of reporting behavior.
Tables F.1-F.2 provide additional supporting evidence that the primary results of this paper are not driven by reporting bias. Table F.1 reports estimates for the effects of registration rates on the prevalence of past-month marijuana use by adolescents separately for the time period before the Ogden Memo and after the Cole Memo. If changes in reporting behavior are more likely to be driven by law passage than by legal market size, then registration rates should have no effect on reported past-month except due to the federal government’s memos. As evidenced in Table F.1, the coefficient estimates for adolescent past-month use are not significantly different if examined before the federal policy reduced enforcement with the Ogden Memo, or after the federal government increased enforcement with the Cole Memo. However, adolescent reporting behavior may be more sensitive to changes in risks from social or community disapproval than to changes in perceived disapproval from law enforcement. If this were the case, then changes in state marijuana policy or changes in federal enforcement policy may have less effect on adolescent reporting behavior than changes in perceived social stigma associated with cannabis consumption, which is likely highly correlated with the number of legal users and suppliers visible in the community. To address this potential concern, estimates of the effects of legal medical marijuana market size on juvenile arrests for marijuana possession are shown in Table F.2. Since adolescents for the most part do not qualify as medical marijuana patients, it is unlikely that there were significant state enforcement changes regarding juvenile arrests for marijuana-related crimes, and thus effects of legal market size on adolescent marijuana arrests are likely highly correlated with effects of legal market size on adolescent cannabis use.
Annual data on juvenile arrests from 1994-2012 were obtained from the Uniform Crime Reports County-Level Detailed Arrest Files compiled by the Inter-University Consortium for Political and Social Research. County data were aggregated up to the state level. Table F.2 reports coefficient estimates for the effect of registration rates on the juvenile marijuana possession arrest rates. In Columns -, a log-linear ordinary least-squares specification is employed, with the dependent variable constructed as the natural log of the number of juvenile arrests for marijuana possession per 100,000 of the relevant-aged population for Columns -, or the natural log of the number of juvenile marijuana possession arrests in Columns -. Columns – employ a negative binomial specification. For all model specifications, growth in the legal market size has a positive effect on juvenile arrests for marijuana possession of similar effect size to that found for the effects on adolescent past-month use. This suggests that the observed effects on self-reported use are not driven solely by changes in reporting behavior. According to estimates by Miron , state and federal expenditures on enforcement of marijuana prohibition exceed $7 billion annually. Citing these costs, hundreds of economists signed a petition in 2012 encouraging state and federal officials to rethink marijuana policy in the United States. While a growing number of states are liberalizing the use and distribution of marijuana, the federal government still maintains that prohibition is necessary to limit the costs of increased marijuana use that would occur under a legalized regime . Chapter 2 shows that growth in the size of legal medical marijuana markets significantly increases recreational use, but the welfare effects of this increased consumption alone are ambiguous.
If individuals are rational and fully anticipate the potential negative consequences of marijuana consumption on future utility, then any increase in use induced by liberalization increases consumer welfare . If, however, individuals underestimate the potential negative consequences or make mistakes in their consumption choices triggered by environmental cues, this increased marijuana use may decrease social welfare . Under any theory of individual decision-making, if marijuana use generates negative externalities, then the socially optimal level of consumption is below the individually optimal level of consumption achieved under a free market regime. This paper contributes toward understanding the potential welfare consequences of legalization by studying how growth in the legal market for medical marijuana affects traffic fatalities and deaths related to alcohol and opioid poisonings. These outcomes will reflect direct externalities from marijuana use due to impaired driving,flood and drain tray as well as indirect externalities resulting from substitution or complementarity with alcohol and opioids. Since past research has found evidence of heterogeneity by age in the elasticity of substitution between marijuana and other substances , particular attention is given to differences in these outcomes by age. In the aggregate, I find that greater medical marijuana access decreases mortality from traffic accidents and substance-related poisonings. However, the aggregate effect masks an important welfare trade-off generated by age differences in the elasticity of substitution between marijuana and alcohol. For older adults aged 45-64, increased medical marijuana availability has positive health consequences, as growth in registration rates reduces mortality related to alcohol and opioid poisonings by 7-11% and 12-16% respectively. In contrast, for youths, greater marijuana access generates negative externalities in the form of a 6% increase in traffic fatalities caused by drivers aged 15-20, with large and significant effects on alcohol-related accidents. These results are consistent with complementarity between alcohol and marijuana among youth and substitution among older adults. The paper proceeds as follows. Section 3.2 provides a brief description of medical marijuana markets in the United States, and section 3.3 discusses the literature on marijuana’s role as a substitute or complement for other additive substances. The data and empirical framework are described in sections 3.4 and 3.5 respectively. Section 3.6 presents the empirical results of the effects of growth in medical marijuana availability on traffic fatalities and substance-related poisonings. Finally, sections 3.7 and 3.8 conclude with discussion and directions for future work. The past few decades have seen a growing movement, both worldwide but particularly in the United States, away from a strict policy of marijuana prohibition. Over half of the U.S. population now live in states with medical marijuana laws , which provide legal protections for the medical use of marijuana by qualifying patients and allow for the legal supply and distribution of medical marijuana. As of 2013, in all but three of the twenty MML states, an individual who wants medical marijuana must obtain a physician’s certification that the individual has a medical condition which could benefit from marijuana use and register with the state.The share of adults registered as patients reflects the extent of medical marijuana participation in a given state and provides a measure of market penetration.
Variation in how production is regulated has led to heterogeneity in medical marijuana take-up across states, and data on state counts of registered medical marijuana patients highlights this variation. Figure 3.1 plots the percent of the state adult population registered as legal medical marijuana users in December 2014 against months since the effective date of MML enactment. As expected, the size of the market is positively correlated with the length of time the MML has been in place. However, another important determinant of market size is the strictness of regulations facing suppliers. States that allowed large-scale production with little oversight or monitoring show growth in market size above trend, while states without operational dispensaries have seen little growth.While Figure 3.1 presents a static snapshot of the current state of MML market size, the structure and size of state medical marijuana markets have undergone substantial changes over the past decade. Although several MML policies had established legal protections for large-scale producers prior to 2009, the threat of federal prosecution and product seizure served as a sufficient barrier to entry in the state-legal market. However, in October 2009, the federal government released the Ogden Memo which formally de-prioritized prosecution of users and producers in MML states who were compliant with state law . This decrease in perceived federal enforcement risk resulted in a significant shift in the structure of the medical marijuana industry. Prior to 2009, California was the only state which had seen the rise of large scale medical marijuana production collectives . However, as detailed in Table 3.1, in states where caregivers could legally produce for multiple patients, the number of operational large-scale producers increased rapidly after the Ogden Memo. For example, in Colorado, very few medical marijuana commercial operations had opened between initial MML enactment and 2009; by mid-2010, over 900 operational dispensaries were identified by law enforcement . In Montana, which did not have state-licensed dispensaries but allowed caregivers to produce for and sell marijuana to an unlimited number of patients, the number of caregivers serving ten or more patients grew from 84 in October 2009 to more than 480 by September 2010. Trends in the number of registered medical marijuana patients reflect this rapid expansion in the size of the market for medical marijuana following the Ogden Memo. Figure 3.2 depicts trends in the total number of registered patients, aggregated over all states with registration rate data that had MMLs effective prior to the Ogden Memo. Consistent with the increase in medical marijuana production, the number of registered patients spiked following the announcement of decreased federal enforcement. The flattening in trend in 2011 was driven by the federal government’s reversal in stance and re-prioritization of involvement in MML states . As documented in Chapter 2, growth in medical marijuana market size significantly increases marijuana consumption among all age groups. The welfare implications of this increased marijuana use will depend largely on whether marijuana consumption itself generates externalities, and on the extent to which marijuana is a substitute or complement to other addictive substances. While prior work has sought to address the effects of medical marijuana liberalization on traffic fatalities, alcohol consumption, and opioid use, there is little agreement as yet. Alcohol and marijuana are the drugs most frequently detected in fatally injured drivers , and the effect of marijuana legalization on drugged driving is a potential negative externality of primary concern in the current policy debate. While a large body of research has established the role of alcohol in increasing crash risk , the effects of cannabis on driving impairment are less clear. Cognitive studies show that marijuana use impairs a number of tasks associated with driving ability , but experimental research has found the effects of marijuana on driver impairment to be only modest when compared to the effects of alcohol. Still, the consumption of both alcohol and marijuana has an additive or even multiplicative effect on driver impairment , with one study finding these effects to be particularly strong during nighttime driving simulations .