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Not in My Backyard? Not so Fast. The Effect of Marijuana Legalization on Neighborhood Crime

45 Pages Posted: 19 Jul 2017  

Jeffrey Brinkman

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

David Mok-Lamme

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Date Written: 2017-07-18

Abstract

This paper studies the effects of marijuana legalization on neighborhood crime using unique geospatial data from Denver, Colorado. We construct a highly local panel data set that includes changes in the location of marijuana dispensaries and changes in neighborhood crime. To account for endogenous retail dispensary locations, we use a novel identification strategy that exploits exogenous changes in demand across different locations. The change in geographic demand arises from the increased importance of access to external markets caused by a change in state and local policy. The results imply that retail dispensaries lead to reduced crime in the neighborhoods where they are located. Reductions in crime are highly localized, with no evidence of benefits for adjacent neighborhoods. The spatial extent of these effects are consistent with a policing or security response, and analysis of detailed crime categories provides indirect evidence that the reduction in crime arises from a disruption of illicit markets.

Keywords: legalization, drugs, crime, policy evaluation

JEL Classification: H73, I18, R50

Suggested Citation

Brinkman, Jeffrey and Mok-Lamme, David, Not in My Backyard? Not so Fast. The Effect of Marijuana Legalization on Neighborhood Crime (2017-07-18). FRB of Philadelphia Working Paper No. 17-19. Available at SSRN: https://ssrn.com/abstract=3005262

Jeffrey Brinkman (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

David Mok-Lamme

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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