Legal marijuana retail outlets are associated with a decrease in localized criminal activity, according to a new study published in the journal Regional Science and Urban Economics.
The study, titled Not in my backyard? Not so fast. The effect of marijuana legalization on neighborhood crime was conducted by economists at Rocky Mountain Health Plans and the Federal Reserve Bank of Philadelphia. These economists assessed the local effects of retail marijuana stores on neighborhood crime in Denver, Colorado. They determined, “[A]n additional dispensary in a neighborhood leads to a reduction of 17 crimes per month per 10,000 residents, which corresponds to roughly a 19 percent decline relative to the average crime rate over the sample period.” The largest decrease in crime came in the category of violent crimes.
The study concludes by stating that “Overall, our results suggest that dispensaries cause an overall reduction in crime in neighborhoods, with no evidence of spillovers to surrounding neighborhoods. … Our results are consistent with theories that predict that marijuana legalization will displace illicit criminal organizations and decrease crime through changes in security behaviors or substitution toward more harmful substances. … Lastly, there is no evidence that increased marijuana use itself results in additional crime.”
Below is the study’s full abstract:
This paper studies the effects of marijuana legalization on neighborhood crime and documents the patterns in retail dispensary locations over time using detailed micro-level data from Denver, Colorado. To account for endogenous retail dispensary locations, we use a novel identification strategy that exploits exogenous changes in demand across different locations arising from the increased importance of external markets after the legalization of recreational marijuana sales. The results imply that an additional dispensary in a neighborhood leads to a reduction of 17 crimes per month per 10,000 residents, which corresponds to roughly a 19 percent decline relative to the average crime rate over the sample period. Reductions in crime are highly localized, with no evidence of spillover benefits to adjacent neighborhoods. Analysis of detailed crime categories provides insights into the mechanisms underlying the reductions.
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