1. The Grass is Greener on the Other Side: How extensive is the Interstate Trafficking of Recreational Marijuana?
Benjamin Hansen, Keaton Miller, Caroline Weber
University of Oregon, University of Washington
AEA/ASSA, 2019

2. Federalism, Partial Prohibition, and Cross Border Sales: Evidence from Recreational Marijuana
Benjamin Hansen, Keaton Miller, Caroline Weber
University of Oregon, University of Washington
AEA/ASSA, 2019

3. Public opinion has reached a tipping point…

4. Next AEA/ASSA in Atlanta?

6. …which has led to policy changes in some places…

7. …and significant discussion in others
Context:
650k MJ arrests in 2016
More than all violent crime
Racial disparities: blacks ~4x as likely as whites to be arrested for possession
Surveys indicate usage rates are identical

8. We don’t know what to expect from (quasi) legal markets
What are the consequences of partial prohibition?
How should we tax and regulate marijuana?
What are the public health consequences of legalization? (prices, stigma, dosage, etc)
How do police shift enforcement priorities?
Unique Case of Federalism

9. Significant conflict between governments
US Supreme Court struck down 90s California law in 6-3 decision
However, Murphy v. NCAA implies that partial prohibition regimes will continue under the Roberts Court
Attorneys General from both political parties concerned about unilateral legalization
Nebraska and Oklahoma sued Colorado claiming law enforcement spillovers

10. We’ll start by focusing in
What are the consequences of partial prohibition?
How extensive is cross border shopping?
How should we tax and regulate marijuana?
What are the public health consequences of legalization? (prices, stigma, dosage, etc)
How do police shift enforcement priorities?

11. We take advantage of a unique opportunity in the Pacific Northwest

12. Background

16. “Federal resources in your States [will not be focused] on individuals whose actions are in clear and unambiguous compliance with state laws.”

17. We focus on Oregon’s market opening on October 1, 2015
Date
Event
11/1998
Medical marijuana allowed in WA and OR
11/2012
WA recreational marijuana ballot measure passes
7/2014
First licensed dispensaries open in WA
11/2014
OR recreational marijuana ballot measure passes
10/2015
“Emergency” bill allows Oregon medical retailers to sell recreational marijuana

18. Data

19. Our data come from Washington’s traceability system
Washington requires firms to report information to a “seed-to-sale” tracking system
Firms report all movements of cannabis plants and MJ products throughout supply chain
Retailers must record price and weight sold
We obtain this data for all WA retailers from

21. Is There Excess Demand on the Border?

25. Oregon’s Legalization

26. Key assumption: No other changes in demand coincident with Oregon’s market opening
Also: Use different techniques to choose bandwidth

27. WA Marijuana sales

28. Oregon border sales

29. Differences-in-discontinuities

32. Robustness Robust to polynomial order Bandwidth
Measures of marijuana (sales/weight)
Definition of border

33. So What??

34. Policy Implications
Gained an extra $64-$100 Million in Revenue from Cross Border Sales
Increased Effective Legalization Per Capita Marijuana in OR, by Percent
Increased Effective Legalization in Idaho by Percent
With Taxes and Federalism We Usually Worry About a Race to the Bottom
Here We Have a Race to Legalization!

39. Partial prohibition is likely to continue

40. This question is important for MJ policy research generally
Many studies use diff-in-diff to estimate effects of legalization on health outcomes
Aydelotte et al (2017, AJPH) on traffic accidents
Cerdá et al (2017, JAMA Ped.) on adolescent use
However, diff-in-diff requires control groups, often taken to be neighboring areas
If spillovers are present, estimates will be biased towards zero