Is Legal Pot Crippling Mexican Drug Trafficking Organizations? The Effect of Medical Marijuana Laws on US Crime

Abstract

We examine the effect of medical marijuana laws (MML) on crime treating the introduction of MML as a quasi-experiment and using three different data sources. First, using data from the Uniform Crime Reports, we find that violent crimes such as homicides and robberies decrease in states that border Mexico after MML are introduced. Second, using Supplementary Homicide Reports' data we show that for homicides the decrease is the result of a drop in drug-law, felony and juvenile-gang related homicides, while other homicides remain unaffected. Lastly, using STRIDE data, we show that the introduction of MML in Mexican border states decreases the amount of cocaine seized, while it increases the price of cocaine. Our results survive a large variety of robustness checks. We interpret our results as evidence that decriminalization of small-scale production and distribution of marijuana cripples Mexican drug trafficking organizations, whose revenues are highly reliant on marijuana. The introduction of MML in Mexican border states lead to a decrease in their activity, which resulted in a drop in drug-related violent crime and drug trafficking. Extrapolating, our results indicate that decriminalization of the production and distribution of drugs may lead to a drop in violence in markets where organized crime is pushed out by licit competition.

Keywords: Cannabis Legalization, Decriminalisation, Crime

JEL Classification: K42, K00, H00