Examining the Link Between Medical

Marijuana and Crime

Bryan Seegmiller--Econ 488

I.

Introduction

In the wake of recent legislation in Colorado and Washington regarding the legalization
of recreational marijuana use, the debate over marijuana policy has once again come to the
foreground of public discussion. This debate has generally centered around the efficacy of a ban
on the consumption of marijuana. Proponents of a marijuana ban generally argue that marijuana
consumption has inherent negative externalitieshigher crime, more drug-related deaths, a
degrading influence on society, and so on. Those opposing a ban argue that prohibition of
marijuana punishes individuals whose behavior affects no one else but themselves. Some have
also argued that prohibition of marijuana actually increases crime, pushing an industry with high
demand into the black market, thus consolidating power in the hands of individuals who are
willing to take their enterprises outside the realm of the law of the land. Whatever the case may
be, there can be no doubt that the topic evokes passionate and emotional responses from both
sides of the discussion.
Due to the proximity of the Colorado and Washington legislative changes, very little data
exists to examine the effects of legal recreational marijuana use. However, medicinal marijuana
has been legalized in some 20 states and Washington DC, with the earliest to do so being
California, as one might guess, in 1996. Thus we must be content with examining the effects of
medical marijuana laws for now.
Though there are many possible externalities involving marijuana use, this study will
focus in particular on examining whether or not there is a link between medical marijuana laws
and changes in crime, including the overall crime index, violent crime, property crime and theft.
The layout of the paper is as follows: section II provides a review of literature of a similar nature;
section III describes the data used in my analysis; section IV outlines my research design; section

V explains the empirical results; section VI includes a summary of important limitations of this
study; and finally, section VII provides some concluding remarks.
II.

Review of the Literature

There is already a broad scope of academic literature on the subject of marijuana and

drug use, and specifically on medical marijuana laws. A review of all the relevant studies on the
topic would be quite extensive, but Ill focus on a few whose results are particularly germane to
the topic of this study.
First of all, Kepple and Freisthler (2012) examined the relationship between crime in
neighborhoods and the presence of a medical marijuana dispensary nearby, finding little to no
statistical evidence that the proximity of a medical marijuana dispensary changed neighborhood
crime rates. Also, Morris et al (2014) foundusing a similar empirical approach to this study
that crime rates were not exacerbated by the introduction of medical marijuana laws, and may
have been correlated with a reduction in homicides. Finally, Chu (2013) found a significant
increase in marijuana use after medical marijuana laws were passed, but no strong evidence that
marijuana is a stepping stone to cocaine and heroin use. On the other hand, Pacula and Kilmer
(2003) found a strong correlation between marijuana use and property crime arrests. Though
Pacula and Kilmer felt the link was causal, it was unclear whether the causal mechanism was
marijuana use impelling individuals to these crimes, or whether marijuana use merely made
those who committing the crimes more likely to be caught doing so. Thus the prior literature
suggests that medical marijuana most likely doesnt have an effect on crime, but results like
those found by Pacula and Kilmer still prevent a definitive conclusion on the matter.
III.

Data

The data were obtained from the FBI Uniform Crime reports from 1990-2012. Included
in the data are the states overall crime index levels in each year, as well as rates per 100,000
inhabitants for violent crime, property crime, murder, rape, robbery, assault, burglary, larceny,
and car theft. The crime index gives an idea of the total incidence of crime relative to the states
population. I added to the data a dummy variable that indicates whether or not the state had
enacted a medical marijuana law by that particular year. Here are the relevant summary statistics
for the data:

Variable
Index
Violent
Property
Murder
Rape
Robbery
Assault
Burglary
Larceny Theft
Car Theft
medical

Summary Statistics
n=1197
Mean Std. Dev. Min
Max
1821.
4243.39 1383.58
5 12173.5
477.15
306.53
65.4 2921.8
1619.
3764.79 1152.59
6 9512.1
6.23
7.19
0.2
80.6
35.46
12.65
11.1
98.6
135.89
135.29
6.4 1266.4
300.44
179.98
34.1 1557.6
806.59
308.47 296.5 2170.6
2577.38
729.35 1188.9 5833.8
380.47
244.54
69.5 1839.9
0.14
0.35
0.0
1.0

The data originally contained information on the above crime categories individually
from each state for the entire time period, so I consolidated that data on all the states into a panel,
with each observation in having a state and year label. All 50 states and Washington DC are
represented, and there are no missing observations, although several states were missing an
entire year in the panel. Since the data comes on an aggregate, state level, it will not be possible
to control for within-state variations on the county or municipal levels. The analysis will thus

give a broader, more general picture of the effect of medical marijuana laws, as opposed to much
of the previous research on the subject, which generally operated on a smaller scope.
IV.

Research Design
The contemporary debate on medical marijuana combined with economic theory suggest

several possible mechanisms by which medical marijuana laws may adversely or positively
affect crime rates. One theory is that marijuana use itself makes individuals more prone to
commit crimes, which possibility was hinted at by Pacula and Kilmer (2003), as previously
mentioned. Combined with the observation by Chu (2013) that medical marijuana laws increase
rates of marijuana usage (a result certainly consistent with economic theory), one would predict
that if this were true medical marijuana would indeed increase crime. There are several other
possibilities on the other end of the debate. For example, it is possible that the banning of
marijuana creates a black market that offers high monetary rewards to lawless individuals who
are willing to engage in illegal enterprises. Under this hypothesis, medical marijuana legislation
would be expected to decrease crime, since it drives part of the black market operated by
criminal characters back into the realm of legality.
Finally there is the issue of whether or not marijuana is a substitute, a complement, a
stepping stone, or has no such relationship to harder illicit drugs. Inasmuch as we believe
marijuana is a substitute to hard drugs, we may expect medical marijuana to decrease crime. If it
is a complement or stepping stone to harder drugs then we may alternatively expect it to increase
crime. The alternative to these possibilities is, of course, the null hypothesis that medicinal
marijuana has no effect on crime whatsoever.
The goal of this analysis, then, is to examine the relationship between medical marijuana
and crime with the above theories in mind. I estimate a simple model as follows:

Log(Crimest)=s + t +st*medical+st
Here we have the natural log of the crime rate for a particular state s in year t as the
dependent variable, with s being state fixed effects, t is year fixed-effects, and st is the error
term. Natural logs are included to translate the estimated effect into percent change units. The
state fixed effects control for any fixed characteristics within each state that may affect the crime
rate, while the year fixed-effects control for any national trends in crime rates. The coefficient
st interacts with the medical marijuana dummy variable. We can interpret this coefficient as the
marginal effect of a state passing a law to legalize medical marijuana (in percentage change).
An alternative model expands the earlier specification, adding in a linear time trend:
Log(Crimest)=s + t +st +st*medical+st
All the terms are the same as previously stated, while the additional term st is an
interaction term that multiplies a dummy variable for each state by each year. This expanded
specification now controls for possible fixed upward or downward trends within each state that
arent controlled for by the year fixed-effects.
As mentioned, the coefficient st represents marginal effect of legalizing medical
marijuana on the crime rate in units of percentage change. To identify this effect as causal,
however, is contingent upon the validity of the inherent identifying assumptionthat the passage
of medical marijuana legislation is uncorrelated with any unobserved factors that influence the
crime rate. In the base model, this implies that the unobservable variations within a state that are
unrelated to national trends must be uncorrelated to unobservable determinants of the crime rate.
The alternative model relaxes this assumption a bit, controlling also for fixed trends of the
unobservables within each state over the time period; but it still must be the case that within-state

variations of unobservable determinants of crime that do not follow a fixed trend over the time
period cannot be correlated with the passage of medical marijuana laws.
In order to reinforce the plausibility of this assumption, I use a probit model to estimate
the percent change in the probability that a state will legalize medical marijuana within the next
fiver state on the natural log of average crime index level of the previous five years. Because
errors between years for the same state may be correlated, I cluster correct the standard errors at
the state level. The purpose of this regression is to test whether or not the observed crime level is
a determinant of the passage of medical marijuana laws; if the effect measured is negligible
and/or the coefficient is statistically insignificant, this gives validity to the assumption that
unobserved factors influencing crime indeed do not cause states to change their laws concerning
medical marijuana. The results for the probit are included below:
Change in probability of legalizing medical marijuana
in next five years
Log of Five Year Crime Index Average
Estimated Marginal Effect: -.014
Std. Error: .03

The average probability that a given state will legalize medical marijuana in the next five
years is about 2.8%, so this indicates that a 10% change in the index level over a five year period
reduces the probability that a law will be change by about 5% relative to the sample average.
However, a chi-square test for the significance of this estimate yielded a chi-square-statistic of .
24, with corresponding p-value of .64, indicating that the log of the crime index average is not
statistically significant. Alternatively I use another probit model to estimate the probability that a
state will change its medical marijuana law in the next five years due to a change in the natural
log of crime index level for the current year and each of the past three years, once again cluster

correcting at the state level. The sum of the coefficients for all the lags is roughly -.02, indicating
a 10% change in the index level over the three years should reduce the probability of legalizing
medical marijuana by 7.5% relative to the sample mean. I perform a chi-square test to determine
if the log of lagged index values along with the log of the current year are jointly significant in
altering the probability of legalizing marijuana; the test indicates that the variables are not jointly
significant. The magnitude of the marginal effects on these probit models are of possible concern
they indicate changes in the probability of legalizing medical marijuana that are small, but
perhaps meaningful. However, since the two chi-square tests indicate a lack of statistical
significance for the marginal effects, these two probit models appear to lend some credence
overall to the underlying assumptions of the model.
V.

Empirical Results
Having the model in place, I now proceed with the empirical analysis. I perform the

regression of various crime rate categories on the medical marijuana dummy with the state and
year fixed effects, then perform the regression with the added linear time-trends. The standard
errors are cluster corrected at the state level to take into account that there will likely be
correlation in the error terms for each state from year to year. Natural logs of the crime categories
are used in order to translate the estimated effect into a percentage change.

Category

Variable
Mean

log(Index)

8.303

log(Violent)

5.999

log(Property
)

8.188

log(Murder)

1.550

Without Time
With Time
Trends
Trends
Coefficient
-.049***
.016
(.011)
(.012)
.011
-.037*
(.023)
(.078)
-.054***
.023**
(.012)
(.012)
-0.08***
-.11***
(.028)
(.034)

-.002
0.024
(.019)
(.018)
-.013
-.069***
log(Robbery)
4.552
(.022)
(.020)
.013
-.045**
log(Assault)
5.532
(.027)
(.022)
.063***
.033**
log(Burglary
6.620
)
(.016)
(.015)
-.069***
.025**
log(Larceny
7.816
Theft)
(.011)
(.012)
-.038
-.009
log(Car
5.763
Theft)
(.025)
(.022)
Note: Standard errors in parentheses *--indicates significance at
10% level
*--indicates significance at 5% level ***--indicates significance
at 1% level
log(Rape)

3.510

When analyzing these statistics, it is important to note that there are large changes in the
results between the first and second specification. For example, the estimate effect of medical
marijuana on the crime index is a 5% negative effect in the first specification, but changes to a
1.6% positive effect with the second specification, and the effect is no longer statistically
significant. Also note that the violent, property, rape, assault, and larceny categories all changed
signs. Observe as well the effects on statistical significance levelsthe only dependent variable
that didnt change in level of significance from the first specification to the second was murder.
With the rest of the variables there are many changesmovement from strong significance to no
significance at all (overall index), change from no significance to strong significance (robbery,
assault), or change in level of significance (violent, property, burglary, larceny). This radical
change in results between the two specifications are an indication that there are large timevarying trends in crime rates within states occurring over this time period; as a result, the first
specification appears to be drastically insufficient. Although it is likely the second specification
is stronger than the first, this strong evidence for the importance of fixed trends within states

could very well indicate that unobserved within-state variations that dont follow a fixed trend
may also play an important role. This possibility would then bring the reliability of the second
specification into question. In short, as it appears that unobserved factors within states are an
important driving force in the crime rates, the identifying assumptions are perhaps not as strong
initially hoped; thus it may not actually be possible to make a causal inference from the data.
Examining the coefficients on the second specification, we see that overall crime rates
dont appear to budge much as a result of medical marijuana laws (as mentioned, the estimated
effect of a 1.6% increase in the crime index is not statistically significant). However, the results
of the second specification do indicate something interesting, which is that the various categories
of violent crime, especially murder, tend to be lower in states with medical marijuana laws.
These results align almost exactly with the findings of Morris et al (2014), who concluded that
medical marijuana appears to have no effect on crime overall, and may have a negative impact on
violent crimes such as murder. However, this inference could certainly be due to reverse
causality, and should be taken with a grain of salt given the limitations of the model previously
addressed.
As an additional robustness test, I regress the logs of the index, violent, and property
crime categories on a set of lagged medical marijuana dummy variables for one-, two-, and
three-years, once again controlling for state and year fixed effects and linear time trends. The lag
variables return coefficients that are positive for the index and property crime, and negative for
violent crime. The lags were jointly significant at the 1% level for the logs of the index and
property crime and were jointly significant at the 10% level for violent crime. This test returns
results that are analogous to the findings of my second specification; nevertheless it is subject to

the same limitations and therefore will most likely not be sufficient to obtain a causal inference.
The statistics for the regression are included in the appendix as Table B.
The data indicate slight evidence that medical marijuana may violent crime and increase
property crimes, but much more research must be done to reach any conclusion. From my
findings, there is scant concrete evidence to make such an assertion; indeed these intriguing data
trends are very likely a result of variations in unobserved factors within each state that have
nothing to do with medical marijuana and merely occurred simultaneously with the passage of
medical marijuana laws. Taking into account previous findings on the matter, and also
considering the slightly positive but statistically insignificant coefficient on the overall crime
index, it appears that medical marijuana has no net effect on overall crime rates. In reference to
the various theories concerning the impact of medical marijuana laws and crime, this conclusion
could indicate one of two possibilities. Either medical marijuana has no effect on crime in any
way, or the competing mechanisms by which medical marijuana may affect crime are offsetting
one another to some extent. The scope of this analysis is not enough to analyze the latter
possibility; I cannot reject the null hypothesis that medical marijuana has no effect on crime. As
is often the case, it appears that those on either side of the debate have proven to be a bit
overzealousmedical marijuana appears to neither reduce nor increase crime rates.
VI.

Potential Limitations
There are a number of important limitations of this study. First of all, since the data I

obtained comes on an aggregate state level, important variations on a smaller level cannot be
examined. For example, it may be the case that medicinal marijuana affects particular subsets of
individuals in ways that cannot be examined with this data. Such variations will not be detected
by my empirical strategy. Another limitation is the fact that in general these laws have not been

on the books all that long. Of the 1127 plus observations in my dataset, only about 160 state-year
observations have a value of one for the medical marijuana dummy variable. This, coupled with
the fact that these laws may take several years to have any noticeable effect (if they do indeed
have an effect), means that the data is simply too recent to yet make a conclusion.
Perhaps the most significant limitation is the lack of current data on what may be a more
interesting questionthe legalization of recreational marijuana and its effects on crime. While
medical marijuana still leaves in place some legislative disincentives for marijuana consumption,
most of these barriers are broken down by the legalization of recreational marijuana. Thus there
is now a larger disparity between states marijuana laws, which disparity would allow for a more
distinct comparison between states laws and their effects. As of now, it is a waiting game until
sufficient data exist from Washington and Colorado, whose laws are still quite recent.
VII.

Conclusion

This paper has examined the link between medical marijuana and crime across states and
years, finding no evidence of an effect. However, just because this study, along with numerous
others, finds no significant causal link between medical marijuana use and crime does not
necessarily mean that there are no externalities associated with the law. For example, it could be
that while medical marijuana does not affect crime, there are other negative societal effects
stemming from it. For example, it is possible that the passage of medicinal marijuana laws cause
increasing societal acceptance of the stoner culture and all that goes with it. This culture may
be detrimental to the development of successful life skills in young men in ways that are simply
not identifiable from the data, and may be hard to examine from any data. The implication is that
one should be careful to take these results and those from other similar studies as evidence that

these laws have no negative impact. There are other things that need to be examined besides the
link between medicinal marijuana and crime before that determination is made.
The findings and limitations of this paper suggest the need for a broader scope of
research on the topic. For example, the possibility of other externalities associated with medical
marijuana use could be examined, such as its cultural effects, as mentioned above (if sufficient
data do indeed exist), or the link between medical marijuana and the use of hard drugs. It would
also be interesting to examine in more depth whether or not medical marijuana has differing
effects on crime categories (possibly decreasing violent crimes and increasing property and theft
crimes), which possibility was hinted at by my findings.

Sources
Pacula, Rosalie, and Kilmer, Beau. "Marijuana and Crime: Is There a Connection Beyond
Prohibition?" National Bureau of Economic Research, 2003. 26. Print.
Chu, Yu-Wei. Do Medical Marijuana Laws Increase Hard Drug Use? Michigan State
Department of Economics and Finance, 2013. 23 <https://www.msu.edu/
~chuyuwei/harddrug.pdf>
Kepple, Nancy J, and Freisthler, Bridgett. Exploring the Ecological Association Between Crime
and Medical Marijuana Dispensaries. Journal Of Studies On Alcohol And Drugs, 2012,
Vol.73(4). 1. Print.
Morris, Robert, TenEyck, Michael, Barnes, J.C., and Kovandzic Tomislav The Effect of
Medical Marijuana Laws on Crime: Evidence from State Panel Data, 1990-2006. Plos
One, 2014.

Appendix
Table A
Change in probability of legalizing medical marijuana in
next five years
Log(Index)

Log(Index Lag 1)

Log(Index Lag 2)

Log(Index lag 3)

-0.05

0.04

-0.09

0.08

(0.08)

(0.04)

(0.04)

(0.05)

Note: Standard errors included in parentheses and cluster corrected at

the state level. A chi-test to determine on the joint significance of the
variables yielded an chi-statistic of .22, with corresponding p-value
of .64, indicating that the variables do not have joint significance.

Table B
The regressions below controlled for state and year fixed effects, included
linear time trends, and had standard errors cluster corrected at the state level

Medical
-.0025
(.016)

Change in log(Index Level)

Medical Lag 1
Medical Lag 2
.009
.029
(.021)
(.022)

Medical Lag 3
.013
(.019)

Medical
-.004
(.016)

Change in log(Property Crime Level)

Medical Lag 1
Medical Lag 2
.011
.028
(.021)
(.023)

Medical Lag 3
.014
(.020)

Medical
-.031
(.030)

Change in log(Violent Crime Level)

Medical Lag 1
Medical Lag 2
-.015
.019
(.040)
(.041)

Medical Lag 3
-.025
(.035)

Note: Standard errors included in parentheses. F-tests on the three regressions indicated
joint significance at the 1% level for the first two regressions, while the third attained
significance at the 10% level.