One-year high: The impacts of Maryland’s legalization of marijuana

Nearly a year after legalizing marijuana in Maryland, some of the early effects of this legislation are beginning to show, marking just the beginning of a broader understanding of its impacts.

On July 1, 2023, Maryland legalized the recreational use of marijuana for individuals 21 years and older. This significant change, affirmed by 67% of voters in the November 2022 Question 4 referendum, comes more than a decade after the state initially authorized medical marijuana use in 2012. Under the new legislation, individuals are allowed to possess up to 1.5 ounces for personal use, cultivate up to two plants at home, and gift cannabis to others without monetary compensation. 

Erasing crime?

On June 16, 2024, Maryland Governor Wes Moore announced pardons for 175,000 persons convicted of crimes related to the possession of cannabis and cannabis paraphernalia. The governor’s action is in line with other governors who have previously legalized marijuana. This provision has important societal implications, influencing the broader opportunities and life outcomes for convicted individuals and their families. 

In Maryland, the pardon applies to everyone convicted of marijuana possession—a population that is  disproportionately Black. Although Black and African American persons make up 33% of Maryland's population, they comprise 70% of persons incarcerated in the state. This has real impacts in Black communities. Convictions on-record make it harder for someone to obtain housing, employment, and education, all of which are crucial for achieving financial stability and building long-term wealth for future generations.

The legislation sparked extensive debates. Detractors express concerns about increased consumption—particularly among youth—a rise in addiction, and elevated crime rates. Proponents counter these arguments by referencing historical events like the Prohibition Era, where criminal activities burgeoned due to the illegal alcohol trade. In fact, legalizing and regulating marijuana can decrease organized crime, enhance consumer safety, and ensure product quality.

Evidence from states where marijuana has been previously legalized tends to support these counterarguments, as detailed in studies such as the one published in the Journal of Economic Literature in 2023 by economists Mark Anderson and Daniel Rees, titled "The Public Health Effects of Legalizing Marijuana." This research contributes to the understanding of the broader impacts of marijuana legalization on public health, crime, and other outcomes, although it is difficult to draw firm conclusions for most outcomes without more post-reform data.

Statistics reveal that crime rates don't necessarily surge post-legalization. This could be because states reallocate law enforcement resources to more severe criminal activities. Various studies have also attempted to shed light on the impact of medical and recreational marijuana legalization on consumption patterns and public health. Youth consumption has not been shown to increase significantly after legalization. Meanwhile, marijuana appears to be a substitute for alcohol, leading to decreased consumption and instances of binge drinking.

That makes a difference, because alcohol is correlated with violence. Several studies suggest that legalization could reduce non-drug related crimes, such as homicides, assaults, rapes, and thefts. The decrease in crime following marijuana legalization can be attributed to a few key factors, including the potential reduction in alcohol use, as well as the elimination of illicit marketplaces that often lead to violence and criminal activity, and the reallocation of law enforcement resources towards more serious offenses. However, the effects of opening and closing dispensaries on crime rates and other societal factors still require more rigorous investigation.

As for the notorious “gateway drug” theory, the evidence doesn't convincingly connect marijuana legalization to increased usage of other, “harder” drugs. In fact, preliminary studies suggest a reduction in opioid use post-legalization. However, these findings require further research to confirm.

Market and tax impacts

The law is reshaping Maryland's cannabis market. In March 2024, Maryland regulators awarded 174 adult-use marijuana social equity licenses from a pool of 1,515 eligible applicants. This was part of a lottery conducted on March 14, which included six different license types, reflecting the state's effort to ensure equitable distribution of licenses in the burgeoning industry. The state distributed licenses across 44 geographic pools, with the number of licenses per area varying based on population density and demand. 

A sales tax on marijuana products has generated significant revenue for the state. According to the Marijuana Policy Project, from July 1, 2023, through March 2024, tax revenues from cannabis sales totaled $40,230,000. In addition to tax revenues, the state benefits from the redirection of resources previously expended on law enforcement, court proceedings, and imprisonment associated with marijuana consumption, letting the state spend more on societal needs.

Public and mental health

Marijuana has shown positive impacts on mental health, with some studies indicating a decrease in prescription medications for mental health conditions. Additionally, while the effect of recreational marijuana on road safety remains under examination, some evidence points to improved road safety following the legalization of medical marijuana.

Maryland's journey toward fully understanding the ripple effects of marijuana legalization is just beginning. The state's focus on regulation, equity, and a data-driven approach aims to guide the comprehensive exploration of the benefits and potential hurdles brought about by this new cannabis policy era. However, the post-legalization data is still limited, preventing firm conclusions and highlighting the need for ongoing research and monitoring to fully assess the effects of the new regulations.

Authored by Mario Macis, PhD

Mario Macis, PhD, is a professor of economics at the Johns Hopkins Carey Business School. He is an applied economist who studies the role of incentives in shaping pro-social behavior, attitudes toward morally contentious exchanges and, more generally, the determinants of social support for market-based solutions to social problems. He is also interested in various topics in health, development, labor and organizational economics.