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The Effect of ENDS Taxes on Substance Use

Public health advocates warn that the rapid growth of legal markets for electronic nicotine delivery systems (ENDS) may generate a “gateway” to marijuana and harder drug consumption, particularly among teenagers. This study is the first to explore the effects of ENDS taxes on substance use. Using data from five national datasets (State and National Youth Risk Behavior Surveys, Behavioral Risk Factor Surveillance Survey, National Survey on Drug Use and Health, and Treatment Episode Dataset) spanning the period 2000-2019, and a generalized difference-in-differences approach, we find that a one-dollar increase in ENDS taxes (2019$) is associated with a 1-to-2 percentage point decline in teen marijuana use and a 0.8 percentage point reduction in adult marijuana use. This result is consistent with e-cigarettes and marijuana being economic complements. We find no evidence that ENDS taxes affect drug treatment admissions or consumption of illicit drugs other than marijuana such as cocaine, methamphetamine, or opioids over this sample period.