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The Pot Rush: Is Legalized Marijuana A Positive Local Amenity?

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  • Diego Zambiasi
  • Steven Stillman

Abstract

This paper examines the amenity value of legalized marijuana by analyzing the impact of marijuana legalization on migration to Colorado. Colorado is the pioneering state in this area having legalized medical marijuana in 2000 and recreational marijuana in 2012. We test whether potential migrants to Colorado view legalized marijuana as a positive or negative local amenity. We use the synthetic control methodology to examine in‐ and out‐migration to/from Colorado versus migration to/from counterfactual versions of Colorado that have not legalized marijuana. We find strong evidence that potential migrants view legalized marijuana as a positive amenity with in‐migration significantly higher in Colorado compared with synthetic‐Colorado after the writing of the Ogden memo in 2009 that effectively allowed state laws already in place to be activated, and additionally after marijuana was legalized in 2013 for recreational use. When we employ permutation methods to assess the statistical likelihood of our results given our sample, we find that Colorado is a clear and significant outlier. We find no evidence for changes in out‐migration from Colorado suggesting that marijuana legalization did not change the equilibrium for individuals already living in the state. (JEL I18, R23, K42, C22)

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  • Diego Zambiasi & Steven Stillman, 2020. "The Pot Rush: Is Legalized Marijuana A Positive Local Amenity?," Economic Inquiry, Western Economic Association International, vol. 58(2), pages 667-679, April.
    • Handle: RePEc:bla:ecinqu:v:58:y:2020:i:2:p:667-679
    DOI: 10.1111/ecin.12832
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    1. Chakraborty Avinandan & Doremus Jacqueline & Stith Sarah, 2021. "The effects of recreational cannabis access on labor markets: evidence from Colorado," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 10(1), pages 1-86, January.
    2. Howard, Greg & Ornaghi, Arianna, 2021. "Closing Time: The Local Equilibrium Effects of Prohibition," The Journal of Economic History, Cambridge University Press, vol. 81(3), pages 792-830, September.
    3. Calkins, Lindsay N. & Ryan, Alexander J. & Zlatoper, Thomas J., 2023. "The Political Economy of Recreational Marijuana Laws in the U.S.: A Spatial Approach," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 53(1), April.
    4. Carrieri, Vincenzo & Madio, Leonardo & Principe, Francesco, 2020. "Do-It-Yourself medicine? The impact of light cannabis liberalization on prescription drugs," Journal of Health Economics, Elsevier, vol. 74(C).
    5. Jason Brown & Elior Cohen & Alison Felix, 2023. "Economic Benefits and Social Costs of Legalizing Recreational Marijuana," Research Working Paper RWP 23-10, Federal Reserve Bank of Kansas City.
    6. Carrieri, Vincenzo & Madio, Leonardo & Principe, Francesco, 2019. "Light cannabis and organized crime: Evidence from (unintended) liberalization in Italy," European Economic Review, Elsevier, vol. 113(C), pages 63-76.

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    More about this item

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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