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Marijuana Legalization and U.S. Postal Inspection Service Seizures: An Exploration of Black Market Activity

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Abstract

Researchers have explored the effects of marijuana legalization on a range of outcomes, including crime and public health. Relatively few, however, have explored the effects of legalization on measures of black market activity. To fill a gap in the literature, this study examined the effects of recreational and medical marijuana legalization on United States Postal Inspection Service (USPIS) marijuana seizure activity. A state-level panel data analysis (with data from 2010 – 2019) revealed that states’ legalization schemes were correlated with seizures. Specifically, medical legalization was associated with increased seizures, irrespective of shipment origin. The key takeaway is that legalization affects black market activity, as measured by federal USPIS seizures. This is important because prior studies of the marijuana legalization—black market nexus were either speculative as to the connections or concerned solely with drug pricing. Implications and limitations are discussed.

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Notes

  1. We adopt the Merriam-Webster definition of “black market” as “illicit trade in goods or commodities in violation of official regulations.” Whether there is a “black” or “underground” marijuana market that is separate and distinct from the one examined in our study is certainly up for debate, but we feel our definition adequately taps at least a portion of the illicit marijuana marketplace.

  2. It is possible that the ANP program’s enactment in the middle of our observation period affected the incidence of seizures, but we would expect it to affect all states equally.

  3. A number of studies have examined the effects of enforcement actions on pricing (e.g., Pollack & Reuter, 2014; Reuter & Kleiman, 1986), but our focus is on quantity.

  4. Oxford Treatment Center, The average cost of marijuana by state, https://oxfordtreatment.com/substance-abuse/marijuana/average-cost-of-marijuana/ (accessed January 28, 2021).

  5. There were some missing data, meaning there were not 510 observations in all the analyses. We discuss below our approaches to assessing whether any missing data affected the results.

  6. The data did not distinguish between seizures of marijuana flowers versus cannabis-infused products (e.g., edibles, topicals). It is possible, though very difficult to know if, such products are difficult to detect in the mail and may thus influence shipping patterns and/or the incidence of seizures.

  7. We also estimated models with enactment instead of passage and the results did not change (tables available on request). Also, we concede this coding scheme may be oversimplified, as states vary in their approaches to legalization and decriminalization. For example, in recreational states there is variability in the number of plants one can grow for personal use. Our panel analyses sacrifice such details, but to the extent there are distinct time-stable differences between states (whether in legalization, criminalization, or anything else for that matter), fixed effects control for them. We discuss our analytic strategy more fully below.

  8. States that had legalized medical marijuana at any point during the analyzed period included Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Utah, Vermont, Washington, and West Virginia. States that had legalized recreational marijuana at any point during the same time included Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, Washington, and the District of Columbia.

  9. Source: https://ucr.fbi.gov/crime-in-the-u.s/2018/crime-in-the-u.s.-2018/tables/table-77 (accessed May 5, 2021).

  10. UCR data do not include state-level marijuana statistics, hence our decision to include drug abuse violations.

  11. The data are available here: https://www.dea.gov/domestic-cannabis-suppression-eradication-program (accessed May 5, 2021).

  12. There were fewer observations in the imputed models (470) than the zero replacement models (506) because there were some missing data for chain variables in specific years (e.g., missing cases for all chain variables in Alaska during 2010).

  13. We realize there is a black market even in legalization states. Unfortunately, we have no data to show that such marijuana, to the extent it exists and is sent through the mail, is cheaper than that which can be purchased legally. This is an acknowledged limitation.

  14. At a reviewer’s suggestion, we also explored the residuals predicted from our main models. The residuals for California were vastly larger than for other states in the analysis. Accordingly, we estimated additional models with California excluded. The results were not altered.

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  1. University of Texas at Dallas, Richardson, TX, USA

    John L. Worrall, Sungil Han & Merin Sanil Mannumood

  2. University of Louisiana, Lafayette, LA, USA

    Sungil Han

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Worrall, J.L., Han, S. & Mannumood, M.S. Marijuana Legalization and U.S. Postal Inspection Service Seizures: An Exploration of Black Market Activity. Am J Crim Just 47, 617–636 (2022). https://doi.org/10.1007/s12103-022-09696-3

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