Recent data shows an interesting phenomenon in Southwestern states that border Mexico: As those states have legalized medical cannabis, they’ve seen a fairly dramatic decline in the rate of violent crimes.
The study was published by The Royal Economic Society in England. Researchers wanted to provide evidence for the claim that legalization indeed reduces violent crimes committed by Mexican drug trafficking cartels. These organizations are the largest supplier of illegal drugs, including cannabis, to America.
So what happens when cannabis becomes legal and available through retail storefronts? The study authors argued that one should expect a drop in crime as local farmers cut into the profits of Mexican drug cartels. Violence is used to defend cartel drug territories, but since violence is an expensive business, reduced profits should mean reduced violence—in theory.
To back up their hypothesis with data, the group performed a rigorous numerical study (details can be found here).
Here’s What Researchers Found
The Royal Economic Society’s model hypothesized that Mexican drug trafficking organizations (DTOs) compete with other DTOs as well as local legal farmers to sell cannabis in the four states that border Mexico (California, Arizona, New Mexico and Texas). The DTOs typically use violence as a way to control their territory or to intimidate another DTO, but doing so requires cash to pay for weapons and soldiers.
There was a huge drop in the rate of drug-related homicides after legalization—a drop of over 40 percent in the Mexican border states.
When medical cannabis is legalized in a border state, the researchers suggest that the DTO has no choice but to reduce investment in violence in that state because, in short, it doesn’t pay.
In the study, the researchers geographically divided the Mexican border into sub-regions belonging to each of the four border states. Then they compared several things. First, they looked at county crime rates before and after states legalized medical cannabis. They also looked at crime rates in counties with and without legal cannabis, and finally they compared county crime relative to distance from the Mexican border.
When all three conditions were factored together, there was about a 12 percent reduction in violent crime in border counties.
The team used data from the United States System to Retrieve Information from Drug Evidence (STRIDE) database, which is compiled by the Drug Enforcement Administration (DEA). STRIDE contains data on drug seizures, quantities seized, and other related factors.
The researchers then looked at crime rate data for robberies, assaults, and murder. When the research team looked at specific crimes, like murder, there was a huge drop in the rate of drug-related homicides after legalization—a drop of over 40 percent in the Mexican border states.
When the team looked at proximity of crime to the border, they found that crime rates drop where the nearest Mexican border crossing is located.
The team says their data supports the original hypothesis that legalization reduces demand for illegal cannabis, and the trickle-down effect of reduced cash and reduced violence starts to happen.
Legalization by the Numbers
Indeed, more money from medical cannabis proceeds is staying in the hands—and the pockets—of Americans. In 2017, the U.S. medical cannabis companies had revenue of $6 billion—an incredible 500 percent increase in just six short years since 2011. Now, hundreds of thousands of employees work in the cannabis sector. Jobs and revenue are expected to double or perhaps even triple over the next four years.
What would the dollar signs be like if cannabis were legalized in all 50 states? A new study by cannabis industry analytics firm New Frontier Data suggested the tax revenue alone would bring in $132 billion in the next decade and create over one million new jobs in agriculture, supply chain, and retail. The study assumes a 15 percent tax rate for retail sales tax, business tax revenue, and payroll tax.
Since cannabis is still considered an illegal drug under federal law, the federal government does not tax legal sales in any state. The federal government should benchmark from the Western states of Oregon, Washington and California, where legal sales have already produced $1.3 billion in tax revenue for the state governments. California is projected to bring in over $1 billion per year in tax revenue now that recreational adult-use has been legalized.
What can’t be counted in dollars, however, is the incredible loss of life that has resulted from the war on drugs. If legalization has the capacity to reduce crime and its tax of human life, then it is certainly something worth further investigation.