"Marijuana Legalization and Nosy Neighbor States"

The title of this post is the title of this notable new paper authored by Alex Kreit now available via SSRN. Here is the abstract:

As more states proceed with marijuana legalization laws, questions have arisen about how to accommodate those states that wish to retain prohibition.  For instance, in 2014, Oklahoma and Nebraska unsuccessfully sued Colorado based on the spillover effects that Colorado’s marijuana legalization law had on its neighboring states.  This article asserts that there are several reasons why state marijuana legalization laws are unlikely to have a large effect on neighboring states.

First, marijuana is not a previously unobtainable good being introduced into the stream of commerce, as it is already available through the black market inexpensively. Second, legalization laws have a number of restrictions that make it very difficult for sellers to profit from exporting legally produced marijuana across state lines. Prohibition states may have reason to worry, however, that illegal marijuana growers will be better able to hide their operations in legalization states that allow residents to grow small amounts of marijuana for personal use, which in turn may increase illegal marijuana exports to neighboring prohibition states.  Prohibition states can minimize this risk of increased marijuana flow by lobbying the federal government to establish rules that protect their interests.