Cannabis Science & Policy Summit - Day 1 - Smart

Effects of Medical Marijuana Market Growth onSubstance Use and Abuse

Rosanna SmartPh.D. Candidate, Department of Economics

University of California, Los Angeles

Cannabis Science & Policy Summit

April 17, 2016

DRAFT: PLEASE DO NOT CITE WITHOUT AUTHOR’S PERMISSION 1 / 15

Why study medical marijuana markets?

I 1937, concerns of large externalities led to US prohibitive tax

I Today, movement away from prohibition

DecriminalizationMedical marijuana laws (MMLs)Commercial legalization

1996 2004 2014

I Limited evidence on consequences


Why study medical marijuana markets?

I Prior work largely compares outcomes pre- and post-MML enactment

- Results vary depending on years covered, specification, etc.- Implicitly assumes an equal and immediate effect of the law

I Different MML regulations → different effects

- Supply regulations will determine competition, access, price- Effects will depend on implementation

I Policy effects may not be immediate

- Lags in implementation- Changes in federal enforcement

This paper: Does growth in the size of legal markets for medical marijuanaaffect non-medical marijuana use or other health outcomes?


Outline of Approach

I Collect new data to measure the size of the legal market

- Counts of registered medical marijuana patients- Document variation between states and over time- Show legal market size responds to changes in supply costs

I Use changes in legal medical market to track effects on recreational use

- Continuous measure accounts for policy dynamics- Allows for heterogeneous effects of market “penetration”- Isolate supply-side effects using production cost shifters as instruments

I Estimate effects on traffic fatalities and substance-related mortality

- Potential age differences in substitution behavior- Separate analysis by age


Plan for this talk

1 Effects of State and Federal Policy on Market Growth

2 Data

3 ResultsMarijuana UseTraffic AccidentsAlcohol- and Opioid-Related Mortality

4 Discussion


What drives growth in the legal market?

I State variation in supply restrictions

Strictest Self-production (e.g. HI, AK)↓ Limited state-licensed dispensaries (e.g. NM, AZ)

Laxest Unrestricted production (e.g. CO, CA)

I Time variation in federal enforcement

- Pre-2009: federal threats to MML states↓Risk Oct, 2009 (Ogden Memo): de-prioritized prosecution of state-law compliers↑Risk June, 2011 (Cole Memo): reversed Ogden → raids on producers

I If federal enforcement risk represents costs to legal users and producers:

- Ogden Memo should increase market size- Cole Memo should decrease market size* Supply response should be largest in states with lax producer restrictions


Pre-Ogden: Registration rates reflect federal barrier to entry

Hawaii: Self-Production

Colorado: Unrestricted CG/Dispensaries

New Mexico: Licensed Dispensaries

Montana: Unrestricted CG/Dispensaries


Ogden Memo: States with lax supply restrictions see most growth






Cole Memo: Large-scale producers shut down






Data: Registration rates as a measure of legal market

I Collected registered patient data for 16 of the 18 MML states

- Limitations: Statistics not maintained similarly across states- Strengths: continuous, measures market penetration (intensity of “treatment”)

I Supply shifters

- State supply restrictions- Timing of federal memos

I State-level outcomes- Marijuana consumption: NSDUH (2002-2012)

- Past-month use, past-year initiation by age group (12-17, 18-25, 26+)

- Externalities and substitution

- Traffic fatalities: FARS (1990-2013)- Alcohol- and opioid-poisoning deaths: CDC (1999-2013)


Results: Effects of Legal Market Growth on Recent Marijuana Use

Federal Memo Interactions as Instruments for Registration RatesEffects on Prevalence of Population Reporting Past-Month Marijuana Use

Age 12-17 Age 18-25 Age 26+IV OLS IV OLS IV OLS

Registration Rate 0.428* 0.442** 1.65*** 1.21*** 0.937*** 0.865***(0.223) (0.163) (0.405) (0.232) (0.283) (0.207)

[5.9] [6.1] [9.5] [7.0] [21.2] [19.6]

Endogeneity p-val 0.90 0.21 0.86Hansen J p-val 0.35 0.89 0.28

Mean Outcome 7.2 17.3 4.4

N=539. Regressions include state/year FE and state-level covariates. Robust SE clustered at state leveland implied percent change in use in square brackets.

Yjt = β0 + β1ˆRRjt +X ′jtδ2 + uj + vt + εjt

RRjt = γ0 + γ1[m−Ogden]Loosejt + γ2[m− Cole]Loosejt + γ3Loosejt +X ′jtδ1 + uj + vt + µjt


Compare Market Growth to MML Enactment: Past-Month Use

Effects of Law (MML) vs. Legal Market Size (Registration Rate) onShare of Population Reporting Past-Month Use

Ages 12-17 Ages 18-25 Ages 26+

My specification: Registration Rate as Policy Variable of Interest

Registration Rate 0.442*** 0.387*** 1.212*** 0.588*** 0.865*** 0.463***(0.163) (0.129) (0.232) (0.209) (0.207) (0.143)

[6.1] [5.3] [7.0] [3.4] [19.6] [10.5]

Past work specification: MML Enactment as Policy Variable of Interest

MML=1 0.450** -0.118 0.853 0.822 0.852*** 0.056(0.220) (0.388) (0.551) (0.549) (0.172) (0.162)

[6.2] [-1.4] [4.9] [4.7] [19.4] [1.1]

Mean of outcome 7.2 7.2 17.3 17.3 4.4 4.4

State-specific trends N Y N Y N Y

N=539. WA, ME excluded. Registration rate and MML included separately. Regressions include S/Y FE andstate covariates. Robust SE clustered at state level and implied percent change in square brackets. Meanregistration rate for MML states is 0.24 (SD=0.56).

Yjt = β0 + β1RRjt +X ′jtδ2 + uj + vt + εjt

Yjt = γ0 + γ1MMLjt +X ′jt θ2 + uj + vt + εjt


Mortality From Motor Vehicle Accidents (1990-2013)

Effects on Traffic Fatalities (Single Vehicle), by Age of Driver InvolvedPredicted % Change in Fatalities from 1pp Increase in Registration Rate (95% CI)

Age 15-20 Age 21-24 Age 25-44 Age 45-64

Mean Total Fatalities 145.1 120.7 348.4 176.3




Age 15-20 Age 21-24 Age 25-44 Age 45-64

Mean Alcohol-Related Fatalities 46.0 60.2 153.5 50.5




Age 15-20 Age 21-24 Age 25-44 Age 45-64

Mean Weekend Fatalities 74.4 63.9 169.8 71.9

Mean Nighttime Fatalities 96.8 87.7 224.1 88.4




Age 15-20 Age 21-24 Age 25-44 Age 45-64

Mean BAC=0 Fatalities 44.9 24.8 73.0 52.5

Mean BAC>0 Fatalities 36.7 50.5 129.1 44.1

Mean Cannabis-involved Fatalities 8.3 7.4 13.1 3.9

Mean Both-involved Fatalities 4.1 4.9 8.5 2.2


Substance-Related Poisoning Mortality (1999-2013)

Registration rate effects on deaths by Alcohol, Prescription Opioids, and HeroinPredicted % Change in Deaths from 1pp Increase in Registration Rate (95% CI)

O: State, Year FE +Covariates, ∆: +State-specific Linear Trends

Age 15-24 Age 25-44 Age 45-64

Mean Alcohol-Related Poisonings 25.4 131.1 143.1





Age 15-24 Age 25-44 Age 45-64

Mean Opioid-Related Poisonings 44.7 207.4 216.2





Age 15-24 Age 25-44 Age 45-64

Mean Heroin-Related Poisonings 19.9 71.0 47.3


Summary of Findings

I Laws reducing supply costs have large effects on legal market size

- MML passage alone has little effect- Federal legalization may have larger effect than suggested by state analyses

I Growth in medical marijuana market size increases adolescent use

- 100 more adult legal users leads to 6 more adolescent users- MML measure misses differences across states and changes over time

I Age differences in substitution behavior generate welfare trade-off- Youths: jointly use alcohol and marijuana

- 6-9% ↑ in traffic fatalities caused by young drivers

- Older Adults: marijuana is a substitute for heavy alcohol and opioid use

- 6% and 11% ↓ in alcohol- and opioid-related deaths


Limitations

I Only have a rough measure of marijuana consumption

- Increased casual use vs. daily use have different health implications- Use is self-reported

I Cannot directly determine mechanisms for spillovers to adolescents

- Evidence suggests ↑ access and ↓ prices important channels- Does access change through formal market, black-market, secondary markets?

I By no means a complete cost-benefit analysis

- No discussion of revenues or cost-savings to the state- Measure contemporaneous and “severe” effects- Other outcomes could include dependence, tobacco use, productivity,

educational attainment, crime


Thank you!
