Multi-Substance Use, Youth and Legalisation: An Economic Analysis

The problem

In the ongoing marijuana legalisation debate, implications on substance use among vulnerable groups, in particular adolescents, is a concern. Evidence from legalisation in the US and Canada is mixed and difficult to generalise, further complicated by different policies and market changes. Co-use with legal substances – namely alcohol and cigarettes – create another layer of challenges in understanding adolescent decisions about (multi) substance use and potential impacts of the changing legal and policy environments on adolescents’ use.

The research

This research develops a novel economic bundle-choice framework to investigate decisions adolescents make around (co)using marijuana, alcohol and cigarettes within an evolving legal environment, and examines the role of key market and legalisation-related policy changes. The research considers marijuana access, use penalties, quality and taxation (price) and complementarity in substance use, using rich data on US high-school students. It finds that all substances are complements among adolescents. And price increase in one substance decreases demand on co-use bundles, and overall use of the two other substances. A predictive policy analysis shows substantial increases in youth marijuana (co)use under some legalisation scenarios, with penalty removal and easing access having the biggest impacts. Effects can, however, be reduced via multi-substance taxation strategies. Failing to consider an individual's (pre-legalisation) marijuana access not only overstates the role of market changes and legalisation effects on use, but underestimates the role of complementary effects across substances.

The impact

With legalisation remaining highly debated and impacts on adolescent use unclear, showing how legalisation – and policies – impacts decisions around (co)use addresses a gap in knowledge. For balancing public health and revenue objectives post-legalisation, the findings provide valuable insights for policy design and highlight the potential of multi-substance tax regimes to help reduce negative impacts on young people. The innovative analysis of (il)licit substance co-use also provides new tools for designing efficient policies that avoid unintended consequences on related substance use and taxation revenues beyond the marijuana market, such as tobacco in Australia.

Department: Economics  
Area: Substance use and legalisation, consumer choice