Next Economic Analysis Seminar Series

Abstract: We examine how legalization-related changes influence young individuals' decisions to consume marijuana, alcohol, and cigarettes, both separately and jointly. Using Monitoring the Future data from 2004–2013, when marijuana was illegal nationwide, we find that complementarities within co-use bundles dominate the smaller substitution effects seen in single-substance choices. The counterfactual analysis indicates that nationwide legalization would raise youth initiation from 30% to 42%, largely driven by increased multi-substance use resulting from reduced police enforcement and easier access. We show that the impact of legalization can be mitigated through coordinated multi-substance taxation policies, including higher taxes on alcohol and cigarettes.