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Light cannabis and organized crime: Evidence from (unintended) liberalization in Italy

Author

Listed:
  • Carrieri, Vincenzo
  • Madio, Leonardo
  • Principe, Francesco
Abstract
The effect of marijuana liberalization on crime is object of a large interest by social scientists and policy-makers. However, due to the scarcity of relevant data, the displacement effect of liberalization on the supply of illegal drugs remained substantially unexplored. This paper exploits the unintended liberalization of cannabis light (C-light, i.e. with low THC) occurred in Italy in December 2016 by means of a legislative gap, to assess its effect in a quasi-experimental setting. Although the liberalization interested all the Italian territory, the intensity of liberalization in the short-run varied according to the pre-liberalization market configuration of grow-shops, i.e. shops selling industrial canapa-related products that have been able to first place the canapa flowers (C-light) on the new market. We exploit this variation in a Differences-in-Differences design using a unique dataset on monthly confiscations of drugs at province level (NUTS-3 level) over the period 2016-2018 matched with data on the geographical location of shops and socio-demographic variables. We find that the legalization of C-light led to a reduction of 12% of confiscation of marijuana per each pre-existing grow-shop and a significant reduction of other canapa-derived drugs (plants of cannabis and hashish). Back-to-envelope calculations suggest that forgone revenues for criminal organizations amount to at least 160-200 million Euros per year. These results support the argument that, even in a short period of time and with an imperfect substitute, the organized crime's supply of illegal drugs is displaced by the entry of official and legal retailers.

Suggested Citation

  • Carrieri, Vincenzo & Madio, Leonardo & Principe, Francesco, 2018. "Light cannabis and organized crime: Evidence from (unintended) liberalization in Italy," Ruhr Economic Papers 774, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:774
    DOI: 10.4419/86788902
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    Cited by:

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    2. Carrieri, Vincenzo & Madio, Leonardo & Principe, Francesco, 2020. "Do-It-Yourself medicine? The impact of light cannabis liberalization on prescription drugs," Journal of Health Economics, Elsevier, vol. 74(C).
    3. Auriol, Emmanuelle & Mesnard, Alice & Perrault, Tiffanie, 2023. "Weeding out the dealers? The economics of cannabis legalization," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 62-101.
    4. Xiuming Dong & Justin Tyndall, 2024. "The impact of recreational marijuana dispensaries on crime: evidence from a lottery experiment," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 72(4), pages 1383-1414, April.
    5. Eric L. Sevigny & Rosalie L. Pacula & Ariel M. Aloe & Danye N. Medhin & Jared Greathouse, 2021. "PROTOCOL: The effects of cannabis liberalization laws on health, safety, and socioeconomic outcomes: An evidence and gap map," Campbell Systematic Reviews, John Wiley & Sons, vol. 17(1), March.
    6. Andrikopoulos, Panagiotis & Gebka, Bartosz & Kallinterakis, Vasileios, 2021. "Regulatory mood-congruence and herding: Evidence from cannabis stocks," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 842-864.
    7. Madio, Leonardo & Principe, Francesco, 2023. "Who supports liberal policies? A tale of two referendums in Italy," Economics Letters, Elsevier, vol. 232(C).
    8. Chakraborty Avinandan & Doremus Jacqueline & Stith Sarah, 2021. "The effects of recreational cannabis access on labor markets: evidence from Colorado," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 10(1), pages 1-86, January.
    9. Mike Langen & Erdal Aydin & Piet Eichholtz & Nils Kok, 2022. "Getting high or getting low? the external effects of coffeeshops on house prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(2), pages 565-592, June.
    10. Davide Fortin, 2023. "Light cannabis as a substitute for addictive substances: A cross-sectional analysis of survey data in France and Italy," French Stata Users' Group Meetings 2023 10, Stata Users Group.
    11. Atella, Vincenzo & Braione, Manuela & Ferrara, Giancarlo & Resce, Giuliano, 2023. "Cohesion Policy Funds and local government autonomy: Evidence from Italian municipalities," Socio-Economic Planning Sciences, Elsevier, vol. 87(PB).

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    More about this item

    Keywords

    cannabis; marijuana light; crime; illegal market; diff-in-diff;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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