The short-run effects of marijuana dispensary openings on local crime

Abstract

The recent legalization of marijuana in several states has led to increased public interest regarding the effect of legalization on crime. Yet, there is limited empirical evidence relating the legalization of marijuana use and distribution to criminal activity. This paper uses a difference-in-differences design to estimate the effect of marijuana dispensary openings on local crime rates in Denver, Colorado. We find that the opening of dispensaries actually decreases violent crime rates in above median income neighborhoods, an important finding in light of increased political debate surrounding legalization. We also find robust evidence that non-marijuana drug-related crimes decrease within a half-mile of new dispensaries but do not simultaneously increase within a half-mile to mile of new dispensaries, with one possible explanation being that legal marijuana sales and hard drug sales are local substitutes. Finally, in line with previous research, we find that vehicle break-ins increase up to a mile away from new dispensaries.

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Fig. 1

Notes

  1. 1.

    Google News had 20 separate news articles on legalizing marijuana on August 10, 2017.

  2. 2.

    We also find that dispensaries are located in neighborhoods with higher crime counts. However, we do not find differences in neighborhood demographics. See Table 11 in the Appendix for details.

  3. 3.

    Freisthler et al. (2017) use the same data, but they do not exploit the latitude and longitude coordinates. Instead, they aggregate to the census block level and only use data from 2013 to 2015.

  4. 4.

    Another possible explanation is that police presence increases immediately after the opening of a new dispensary. However, it is unlikely that police presence increased around the opening of all 188 dispensaries in our data, and in conversations with the Denver police department, officers indicated there were no efforts to increase police presence around dispensaries.

  5. 5.

    This second category is often called “common cause.”

  6. 6.

    Because Federal law still prohibits the sale and use of marijuana, the majority of transactions are still cash based.

  7. 7.

    Freisthler et al. (2017) do not have detailed information on when dispensaries opened.

  8. 8.

    Marijuana remains illegal at the Federal level.

  9. 9.

    To be sure, we estimated our primary model for each major crime type in the data. We do not report results for all crime types for lack of space, but results are available upon request.

  10. 10.

    However, as a robustness check we tested whether conversions had an effect on crime and found no statistically significant effect. Results available upon request.

  11. 11.

    ,Results are roughly the same if we exclude the month the dispensary opened, e.g., March 2012.

  12. 12.

    A 6-month pre-/post-period robustness check is presented in the Appendix Table 10.

  13. 13.

    One might wonder why we do include a variable indicating whether a dispensary is licensed for medical or recreational dispensing. All dispensary openings prior to 2014 are medical dispensaries by law. After 2014, when recreational dispensing became legal, nearly all new dispensaries were recreational. Therefore, the dummy for medical versus recreational is absorbed by the fixed effects. In practice, most dispensaries are now licensed for both types of dispensing. We also examined the effects of dispensaries converting from medical to recreational on crime in the same manner as Conklin et al. (2017). We did not find statistically significant results, likely because conversion dates are imprecise.

  14. 14.

    Search “denvergov content marijuana facility location guide,” for a list of the restrictions on dispensary locations.

  15. 15.

    We can get a sense of the distribution of application processing times by comparing dispensary opening dates to the initial application dates for dispensary openings that occurred within 12 months of the initial application date at the beginning of legalization. For instance, three dispensaries opened August 2010, three opened September 2010, six opened October 2010, four opened November 2010, two opened December 2010, and four opened in January of 2011 all with the initial application dates of February 2010. This suggests that the processing time for applications is between 6 and 11 months.

  16. 16.

    We find similar results using negative binomial regressions or zero-inflated Poisson where the alternative estimators converge. However, given the low count levels of certain crimes and the high-dimensional fixed effects, not all estimators converge for all categories of crime, e.g., marijuana offenses. Additionally, OLS yields similar marginal effects for all crime categories.

  17. 17.

    Marijuana crime results are not presented because the Poisson routine does not converge for this category of crime.

  18. 18.

    We also added \({n\mathrm {disp}}_\mathrm{{im}}^2\) to the model, but the coefficient was also statistically insignificant. If we relax the fixed effects, the coefficient on \({n\mathrm {disp}}_\mathrm{{im}}\) becomes statistically significant, which indicates that most of the variation in \({n\mathrm {disp}}_\mathrm{{im}}\) is absorbed by the fixed effects.

  19. 19.

    Dispensary fixed effects were sufficient in Chang and Jacobson (2017) because they evaluated the closures of multiple dispensaries on a single date. Thus, there were no neighborhood-specific changes in their sample period.

  20. 20.

    Crime counts are normalized by month of sample because the pre-treatment period is different for each treated location. This is done by regressing crime counts on month of sample fixed effects and subtracting the estimated fixed effects from the observed crime counts.

  21. 21.

    The section entitled, “Dispensary location selection: potential for external validity?”  in the appendix presents basic summary statistics for neighborhoods with and without dispensaries. Notably, we find that neighborhoods with dispensaries have statistically significantly higher crime counts but do not exhibit statistical differences in crime rates or in key demographics.

  22. 22.

    We also tested a 1/4 mile radius, but for many of the crime categories the Poisson routine does not converge. For all that did converge, the effects were statistically insignificant.

  23. 23.

    The average cost of a theft is $3532 (McCollister et al. 2010; Miller et al. 2004). We could not find information on the costs of drug and alcohol possession and sales crimes.

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Correspondence to Jesse Burkhardt.

Appendix

Appendix

Appendix Tables and Figures

See Figs. 23 and Tables 78910.

Fig. 2
figure2

Number of marijuana dispensary openings per year

Fig. 3
figure3

Trends in marijuana-related crimes

Table 7 Dispensary-level crime rate summary statistics
Table 8 Test of parallel trends
Table 9 Local effects of marijuana dispensary openings: 1/3 mile radius OLS estimates
Table 10 Local effects of marijuana dispensary openings: 1/2 mile radius for 6 months before and after opening date

Dispensary location selection: potential for external validity?

In the Appendix, we explore whether dispensaries are located in unique areas of Denver. There are 283 neighborhoods that are defined by the Denver Assessor, and these neighborhoods are meant to group areas of homogeneous single-family residences based on household characteristics and demographics. The neighborhoods are about the size of census block groups. A map of the neighborhoods along with the location of each dispensary is provided in Fig. 4.

Table 11 presents the balance of observables across neighborhoods with and without dispensaries. This table shows that neighborhoods with dispensaries have statistically significantly higher crime counts across all crime categories. This is unsurprising given the strict zoning restrictions placed on dispensary locations. On the other hand, we find no statistical differences in month-to-month crime trends between neighborhoods with and without dispensaries, indicating the crime rate over time is relatively homogeneous across Denver. Perhaps most surprisingly, we find there are no statistical differences between several key demographics including race, education, and income between neighborhoods with and without dispensaries.

Overall, Table 11 suggests that zoning regulations place dispensaries in locations with higher crime counts on average, but these locations are not statistically different from non-dispensary locations based on other key observables. This suggests that we may see similar effects if dispensaries were placed in other parts of Denver.

Fig. 4
figure4

Assessor neighborhoods and dispensaries in Denver

Table 11 Crime and demographic summary statistics by neighborhood

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Burkhardt, J., Goemans, C. The short-run effects of marijuana dispensary openings on local crime. Ann Reg Sci 63, 163–189 (2019). https://doi.org/10.1007/s00168-019-00931-0

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