Research

Job Market Paper

Recreational marijuana legalization aims to reduce the drug trafficking market’s presence and societal costs. Post-legalization, a third of Uruguayan marijuana users still buy from drug dealers. I assess the effect of legalization on the black market’s presence. For this, I estimate a novel demand model in a post-legalized environment that includes access selection/limitations, alternative choices regarding the source (legal or drug trafficking), and individual-level prices. I use these estimates to identify tools that steer the demand to the legal market. Counterfactuals show that a 10% price reduction increases legal marijuana use by 9%, but primarily driven by new users. Reducing access to the drug trafficking market decreases the use of both legal and illegal marijuana, emphasizing access’s role in demand. In contrast, widespread legal marijuana access leads to a 17% increase in legal use, with half coming from the drug trafficking market. Understanding consumer substitutions between (il)legal options is crucial for policies targeting black market reduction.


Work in progress