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Working Paper
Economic Benefits and Social Costs of Legalizing Recreational Marijuana
We analyze the effects of legalizing recreational marijuana on state economic and social outcomes (2000–20) using difference-in-differences estimation robust to staggered timing and heterogeneity of treatment. We find moderate economic gains accompanied by some social costs. Post-legalization, average state income grew by 3 percent, house prices by 6 percent, and population by 2 percent. However, substance use disorders, chronic homelessness, and arrests increased by 17, 35, and 13 percent, respectively. Although some of our estimates are noisy, our findings suggest that the economic ...
Legal Marijuana Poses Policy Questions for States
In recent years, more states have legalized marijuana for medical or recreational use. This raises economic questions for policymakers as they decide how to regulate cannabis.