The Effect of E-Cigarette 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 explores the effects of ENDS taxes on substance use. Analyses are based on difference-in-differences and event-study methods applied to both survey (Youth Risk Behavior Surveillance System and Behavioral Risk Factor Surveillance System) and administrative (Treatment Episode Data Set) data. Our results imply that a one-dollar increase in ENDS taxes (2023$) is associated with a 1.0 to 1.5 percentage point decline in teen marijuana use and in co-use of ENDS and marijuana. This result is consistent with e-cigarettes and marijuana being economic complements. We also find that youth responses to ENDS taxes, in terms of their ENDS use and spillovers into marijuana use, appear to moderate over the longer term. 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.