Auriol, Emmanuelle, Mesnard, Alice and Perrault, Tiffanie (2023) Weeding out the Dealers ? The Economics of Cannabis Legalization. Journal of Economic Behavior and Organization (n° 216). pp. 62-101.

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Identification Number : 10.1016/j.jebo.2023.09.027

Abstract

We model consumer choices for recreational cannabis in a risky environment and its supply under prohibition and legalization. While legalization reduces the profits of illegal providers, it increases cannabis consumption. This trade-off can be overcome by combining legalization with sanctions against the black market, and improvements to the quality of legal products. Numerical calibrations highlight how a policy mix can control the increase in cannabis consumption and throttle the illegal market. In the US, the eviction prices we predict to drive dealers out of business are much lower than the prices of legal cannabis in most of the states that opted for legalization, leaving room for the black market to flourish. Analyzing the compatibility of several policy goals sheds light on the less favorable outcomes of recent legalization reforms and suggests a new way forward.

Item Type: Article
Language: English
Date: December 2023
Refereed: Yes
Place of Publication: Amsterdam
Uncontrolled Keywords: Recreational cannabis,, Legalization,, Crime, Policy, Regulation
JEL Classification: I18 - Government Policy; Regulation; Public Health
K32 - Environmental, Health, and Safety Law
K42 - Illegal Behavior and the Enforcement of Law
L51 - Economics of Regulation
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 10 Oct 2023 09:39
Last Modified: 04 Jun 2024 09:52
OAI Identifier: oai:tse-fr.eu:128600
URI: https://publications.ut-capitole.fr/id/eprint/48303

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