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The Impact of Recreational Cannabis Laws on Cannabis Use & Harm: How You Measure the Market Matters
Authors: Rosalie Liccardo Pacula, PhD1; Christine Buttorff, Ph.D.; Greg Tung, PhD; Asa Wilks; and George Sam Wang, MD, FAAP, FAACT
As of January 1, 2021, over half of US states have allowed cannabis for medical use, and 10 states have allowed recreational sales. The value of the legal cannabis market has grown to exceed $38 billion in 2020 and is estimated to nearly triple in value in just 5 years. Considerable attention has been given to the impact of legalization on a variety of public health and criminal justice outcomes. However, criticisms have been raised about the early literature because of its lack of distinction between the passage of the law versus the opening of cannabis markets. Physical availability of cannabis is an aspect of supply that regulators have been told to consider carefully, as it is expected to increase use of cannabis by increasing exposure to environmental cues promoting use, reducing search costs, deterring quit attempts and lowering prices due to competition. Strategically managing availability might allow for growth in the market while helping reduce potential harmful effects of legalization on various public health outcomes.
In this paper we investigate how legalization of cannabis for adult-use (i.e. “recreational cannabis law”) influences cannabis-related harm focusing on alternative ways in which cannabis markets might be defined at the county level. We make use of Colorado’s early market experience for both medical and recreational cannabis (2011-2018), and exploit the natural within state variation in permissions for both medical and recreational markets at the local level. Merging data from Colorado’s Department of Revenue on licensed outlets and the Colorado Hospital Association data on cannabis-involved ED and inpatient visits, we demonstrate how and why it is important to appropriately consider the presence and size of medical markets before evaluating impacts of legalization. We find that markets with no prior exposure to medical cannabis experience larger increases in measures of harmful use than markets that had existing medical markets, suggesting that it is exposure to a commercialized market rather than the passage of the law that influences use and harms. We also show that sales data, which has typically been a reliable measure of markets for other intoxicating substances, is a poor proxy at this time due to the decisions by firms to locate in areas where they can attract out of state consumers. Implications for understanding the literature on the impacts of these policies are discussed.