The Grass is Greener on the Other Side: How Extensive is the Interstate Trafficking of Recreational Marijuana?

60 Pages Posted: 1 May 2018

See all articles by Benjamin Hansen

Benjamin Hansen

University of Oregon - Department of Economics; NBER; IZA

Keaton Miller

University of Oregon

Caroline Weber

University of Oregon - Department of Economics

Date Written: March 2018

Abstract

Marijuana is partially prohibited: though banned federally, it will soon be available to almost 1 in 4 U.S. adults under state statutes. A chief concern among policy makers is marijuana trafficking from states with legal markets elsewhere. We measure trafficking with a natural experiment. Oregon opened recreationally licensed stores on October 1, 2015, next to Washington where stores had been legally selling recreational marijuana since July, 2014. Using administrative data covering the universe of recreational market sales, we find Washington retailers along the Oregon border experienced a 41% decline in sales immediately following Oregon's market opening. In counties that are the closest crossing point for the majority of the neighboring population, the estimated decrease grows to 58%, and is the largest for the biggest transactions. We also test if these inter-state spill-overs led to health externalities by studying traffic accidents in Oregon from 2011-2015.

Keywords: Externality, Spillover, Drug Trafficking, Diversion, Prohibition, Marijuana, Natural Experiment, Regression Discontinuity, Illegal Drugs

JEL Classification: I12, I18, K42, R41, P48

Suggested Citation

Hansen, Benjamin and Miller, Keaton and Weber, Caroline, The Grass is Greener on the Other Side: How Extensive is the Interstate Trafficking of Recreational Marijuana? (March 2018). Available at SSRN: https://ssrn.com/abstract=3040362 or http://dx.doi.org/10.2139/ssrn.3040362

Benjamin Hansen (Contact Author)

University of Oregon - Department of Economics ( email )

1285 University of ORegon
Eugene, OR 97403
United States

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Keaton Miller

University of Oregon ( email )

1280 University of Oregon
Eugene, OR 97403
United States

Caroline Weber

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States

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