Effects of Medical Marijuana Market Growth on Substance Use and Abuse

1. Effects of Medical Marijuana Market Growth on
Substance Use and Abuse
Rosanna Smart
Ph.D. Candidate, Department of Economics
University of California, Los Angeles
Cannabis Science & Policy Summit
April 17, 2016
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2. Why study medical marijuana markets?
1937, concerns of large externalities led to US prohibitive tax
Today, movement away from prohibition
Decriminalization
Medical marijuana laws (MMLs)
Commercial legalization
1996 2004 2014
Limited evidence on consequences
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3. Why study medical marijuana markets?
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
Different MML regulations → different effects
- Supply regulations will determine competition, access, price
- Effects will depend on implementation
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 marijuana
affect non-medical marijuana use or other health outcomes?
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4. Outline of Approach
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
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
Estimate effects on traffic fatalities and substance-related mortality
- Potential age differences in substitution behavior
- Separate analysis by age
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5. Plan for this talk
1 Effects of State and Federal Policy on Market Growth
2 Data
3 Results
Marijuana Use
Traffic Accidents
Alcohol- and Opioid-Related Mortality
4 Discussion
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6. What drives growth in the legal market?
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)
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
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
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7. Pre-Ogden: Registration rates reflect federal barrier to entry
Hawaii: Self-Production
Colorado: Unrestricted CG/Dispensaries
New Mexico: Licensed Dispensaries
Montana: Unrestricted CG/Dispensaries
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8. Ogden Memo: States with lax supply restrictions see most growth
Hawaii: Self-Production
Colorado: Unrestricted CG/Dispensaries
New Mexico: Licensed Dispensaries
Montana: Unrestricted CG/Dispensaries
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9. Cole Memo: Large-scale producers shut down
Hawaii: Self-Production
Colorado: Unrestricted CG/Dispensaries
New Mexico: Licensed Dispensaries
Montana: Unrestricted CG/Dispensaries
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10. Data: Registration rates as a measure of legal market
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”)
Supply shifters
- State supply restrictions
- Timing of federal memos
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)
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11. Results: Effects of Legal Market Growth on Recent Marijuana Use
Federal Memo Interactions as Instruments for Registration Rates
Effects 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 0.86
Hansen 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 level
and implied percent change in use in square brackets.
Yjt = β0 + β1
ˆRRjt + Xjt δ2 + uj + vt + εjt
RRjt = γ0 + γ1[m − Ogden]Loosejt + γ2[m − Cole]Loosejt + γ3Loosejt + Xjt δ1 + uj + vt + µjt
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12. Compare Market Growth to MML Enactment: Past-Month Use
Effects of Law (MML) vs. Legal Market Size (Registration Rate) on
Share 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 and
state covariates. Robust SE clustered at state level and implied percent change in square brackets. Mean
registration rate for MML states is 0.24 (SD=0.56).
Yjt = β0 + β1RRjt + Xjt δ2 + uj + vt + εjt
Yjt = γ0 + γ1MMLjt + Xjt θ2 + uj + vt + εjt
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13. Mortality From Motor Vehicle Accidents (1990-2013)
Effects on Traffic Fatalities (Single Vehicle), by Age of Driver Involved
Predicted % 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
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14. Mortality From Motor Vehicle Accidents (1990-2013)
Effects on Traffic Fatalities (Single Vehicle), by Age of Driver Involved
Predicted % Change in Fatalities from 1pp Increase in Registration Rate (95% CI)
Age 15-20 Age 21-24 Age 25-44 Age 45-64
Mean Alcohol-Related Fatalities 46.0 60.2 153.5 50.5
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15. Mortality From Motor Vehicle Accidents (1990-2013)
Effects on Traffic Fatalities (Single Vehicle), by Age of Driver Involved
Predicted % Change in Fatalities from 1pp Increase in Registration Rate (95% CI)
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
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16. Mortality From Motor Vehicle Accidents (1990-2013)
Effects on Traffic Fatalities (Single Vehicle), by Age of Driver Involved
Predicted % Change in Fatalities from 1pp Increase in Registration Rate (95% CI)
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
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17. Substance-Related Poisoning Mortality (1999-2013)
Registration rate effects on deaths by Alcohol, Prescription Opioids, and Heroin
Predicted % 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
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18. Substance-Related Poisoning Mortality (1999-2013)
Registration rate effects on deaths by Alcohol, Prescription Opioids, and Heroin
Predicted % 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 Opioid-Related Poisonings 44.7 207.4 216.2
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19. Substance-Related Poisoning Mortality (1999-2013)
Registration rate effects on deaths by Alcohol, Prescription Opioids, and Heroin
Predicted % 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 Heroin-Related Poisonings 19.9 71.0 47.3
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20. Summary of Findings
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
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
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
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21. Limitations
Only have a rough measure of marijuana consumption
- Increased casual use vs. daily use have different health implications
- Use is self-reported
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?
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
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22. Thank you!
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