Marijuana and alcohol: Evidence using border analysis and retail sales data

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Abstract

We use retail scanner data on purchases of alcoholic beverages across US counties for 2006 to 2015 to study the link between medical marijuana laws (MMLs) and alcohol consumption. To do this, we exploit differences in the timing of marijuana laws among states and find that they are substitutes. We show that unlike traditional national-level analysis, focusing on contiguous-border county pairs provides unbiased estimates of the effect of MMLs on alcohol sales. Specifically, alcohol sales in counties located in MML states decreased by 12.4%. Results are robust to including placebo effective dates for MMLs in treated states.

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Baggio, M., Chong, A., & Kwon, S. (2020). Marijuana and alcohol: Evidence using border analysis and retail sales data. Canadian Journal of Economics, 53(2), 563–591. https://doi.org/10.1111/caje.12437

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