States That Legalize Medical Marijuana Have Significantly Lower Health Insurance Premiums Than Non-Legal States

August 24, 2023 ·

According to a recent study published in the International Journal of Drug Policy, states that had legalized medicinal marijuana saw significant drops in health insurance costs compared to those where cannabis remained completely illegal.

The authors determined that once a state passed a medical cannabis law, there were significant decreases in insurance premiums over the following years by looking at 10 years’ worth of private health insurance data obtained from the National Association of Insurance Commissioners.

Sustained Premium Reductions Over Time in Legalized Medical Marijuana States

Although the decreases were modest in the initial period following enactment, the research revealed that by the seventh year after that, yearly premiums had decreased by $1,663 compared to control group states. Comparable declines were observed after eight years ($1,542) and nine years ($1,626), indicating a consistent and enduring decline over time.

The study’s authors conclude that “even though the impact only becomes evident after seven years from the enactment of medical cannabis laws, there exists a notable and substantial decrease in health insurance premiums” in states that legalize medical marijuana.

“Given the framework of insurance pooling and community rating,” they note, “these savings are beneficial for both cannabis consumers and non-consumers alike.” The authors highlight that the findings dispel worries that legalization could raise healthcare expenses. They stated that the initial apprehensions about the legalization of medical cannabis causing an upsurge in medical care costs, leading to higher insurance premiums, seem to lack basis.

The researchers specifically focused on individual private health plans, excluding employer-sponsored insurance or Medicaid. The study emphasizes that health insurance expenditures range from 16% to 34% of the average household budget in the United States.

To accommodate multiple variables, the researchers focused on states where exclusively medical marijuana had been legalized, excluding states with existing adult-use legalization from their analysis. Meanwhile, the control group consisted of states lacking medical cannabis laws and those that had enacted such legislation but hadn’t yet implemented it.

The authors acknowledged the presence of a distinction in the reduction of premiums based on the timing of a state’s implementation of its medical cannabis law, although further investigation is required. They remarked, “Whether a state adopted the law early, midway, or later, there appears to be a slight increase in premiums during the second full year following enactment.

However, states that adopted the law early continued to experience premium reductions from years 3 to 9, whereas states adopting the law in the middle saw a less pronounced impact on premiums after year 3.”

The research article was authored by Amanda C. Cook, a professor of economics at Bowling Green State University; E. Tice Sirmans, a Finance, insurance, and Law professor at Illinois State University; and Amanda Stype, an economics professor at Eastern Michigan University.

This new paper contributes to the expanding collection of research that highlights potential public health advantages linked to the termination of prohibition. Numerous studies have indicated, for instance, that states with medical marijuana regulations exhibit notably lower rates of prescribed opioid use. Furthermore, earlier this year, a report discovered a similar correlation between adult-use legalization and decreased demand for opioids.

Pharmaceutical Industry Economics Shift Post-Medical Marijuana Legalization

In March, a study established that states permitting medical marijuana observed decreased payments to doctors for opioid-related treatments—an additional sign that patients are embracing cannabis as an alternative to prescription drugs.

On an individual level, a recent research article featured in the International Journal of Drug

Policy revealed that cannabis significantly alleviated opioid cravings for individuals who were using opioids without a prescription. This suggests that broadening legal access to cannabis could potentially offer a safer replacement for more people.

Furthermore, a study published in January by the American Medical Association (AMA) revealed that around one in three chronic pain patients report utilizing cannabis as a treatment approach. Among this subset, most patients have chosen cannabis as an alternative to other pain-relief medications, including opioids.

Another investigation conducted by the AMA established a connection between state-level medical cannabis legalization and substantial declines in opioid prescriptions and usage among specific cancer patients.

In a study disclosed in September, it was unveiled that providing individuals with legal access to medical cannabis holds the potential to assist patients in reducing or discontinuing their reliance on opioid pain medications while upholding their quality of life.

A collaborative effort between Emerald Coast Research and Florida State University College of Medicine involved surveying 2,183 patients recruited from dispensaries throughout Florida. The goal was to gain insights into the impact of medical cannabis legalization within the context of the opioid overdose epidemic. The participants completed comprehensive 66-item cross-sectional surveys.

The findings revealed that most patients, precisely 90.6%, indicated that they had found marijuana to be “highly or incredibly beneficial in addressing their medical condition.” Furthermore, 88.7% of survey participants said cannabis was “highly or essential” in shaping their overall quality of life.

Similarly, during the same month, another research article highlighted that the pharmaceutical sector experienced a significant economic setback after the legalization of marijuana by states, resulting in an average market loss of nearly $10 billion for drug manufacturers with each legalization model.

Published in the peer-reviewed journal PLOS ONE, the research paper examined stock return and prescription drug sales data about 556 pharmaceutical companies from 1996 to 2019. The study delved into market patterns before and after introducing medical and adult-use cannabis legalization laws at the state level.

According to the study’s authors, the stock returns experienced a decline of “1.5 – 2% at the 10-day mark following legalization.” The authors discovered that these returns diminished due to medical and recreational legalization, affecting both generic and brand pharmaceutical companies. Investors foresee that a single instance of legalization will lead to an average reduction of $3 billion in annual sales for drug manufacturers.


The International Journal of Drug Policy recently published research demonstrating that states legalizing medical marijuana experience decreased health insurance premiums, debunking concerns of higher healthcare costs. Analyzing a decade of insurance data, the study reveals a consistent decline in premiums over time, highlighting the broader benefits of legalization.

This aligns with growing evidence showing medical marijuana’s positive impact, including reduced opioid use, prescriptions, and improved chronic pain management. Moreover, cannabis legalization has economically affected the pharmaceutical sector, causing market losses. The research underscores the multifaceted effects of medical marijuana legalization, informing policymakers, healthcare professionals, and researchers. (Full Story)

In categories:Lifestyle Medical
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