Philadelphia, PA: The enactment of medical cannabis access laws is associated with reductions in auto insurance premiums and improvements in overall traffic safety, according to data published in the journal Health Economics.
A team of economists associated with Temple University in Philadelphia, the University of Arkansas, Little Rock and Eastern Kentucky University assessed the relationship between legalized medical cannabis access (via licensed dispensaries) and auto insurance premiums between the years 2014 and 2019.
Researchers reported that medical access was associated with a decrease in auto premiums. “We estimate that legalizing medical cannabis reduces annual auto insurance premiums by $22 per household, a reduction of 1.7 percent for the average household,” they wrote. “The effect is stronger in areas directly exposed to a dispensary, suggesting increased access to cannabis drives the results. In addition, we find relatively large declines in premiums in areas with relatively high drunk driving rates prior to medical cannabis legalization. This latter result is consistent with substitutability across substances that is argued in the literature.”
They concluded: “While this [$22] reduction may be inconsequential to an individual policy-holder, the aggregate effects are economically meaningful. For just the policyholders in our switching states, we estimate a combined annual reduction in premiums of $500 million. Extending our results to other states, we find that medical cannabis legalization has reduced auto insurance premiums by $1.5 billion in all states that have currently legalized, with the potential to reduce premiums by an additional $900 million if the remaining states were to legalize. Because auto insurance premiums are directly tied to property damage and health outcomes, we find evidence of a positive social impact of medical cannabis on auto safety.”
The study’s findings are consistent with those of prior analyses similarly reporting a decrease in traffic fatalities following the implementation of medical cannabis access, including reductions in motor vehicle accidents involving drivers under the influence of alcohol and opioids.
Full text of the study, “Medical cannabis and automobile accidents: Evidence from auto insurance,” appears in Health Economics.Additional information is available from the NORML fact sheet, ‘Marijuana and Psychomotor Performance.’