State Recreational Cannabis Laws and Racial Disparities in the Criminal Legal System

We estimate the direct and spillover effects of cannabis legalization on longstanding racial disparities in criminal justice outcomes. We find that legalization reduces cannabis possession and sales arrests for White and Black populations, narrowing but not eliminating disparities. We also find spillover increases in hospitalizations involving cannabis and other illegal drugs. However, spillovers on arrests, incarcerations, and crimes involving serious violent or property offenses are insignificant or even decrease. Other illegal drug sales arrests decrease across populations, while illegal drug incarcerations decrease only among White populations. Spillovers on other low-level offenses are insignificant for White but mixed for Black populations. (JEL I12, J15, K14, K41, K42)