Medical Cannabis Laws Linked to Lower Individual-Market Health Insurance Premiums
A 2023 study published in The International Journal of Drug Policy found that individual-market health insurance premiums were lower in states after they adopted medical cannabis laws. The study, by researchers from Bowling Green State University, Illinois State University, and Eastern Michigan University, analyzed state-level private health insurance data collected from 2010 through 2021 by the National Association of Insurance Commissioners.
Using a difference-in-differences model designed to account for differences in when states adopted medical cannabis policies, the researchers compared premium trends in states with medical cannabis laws against those in states without them. The analysis found no immediate reduction. The estimated difference emerged seven years after a law took effect and persisted through the ninth year.
Compared with the control group, individual-market premiums were estimated to be about $1,663 lower in the seventh year after implementation, $1,542 lower in the eighth year, and $1,626 lower in the ninth year. These figures represent estimated differences between states—not the total annual premium paid by every policyholder.
The researchers suggested that both cannabis users and non-users could benefit from the lower premiums. Individual-market insurance generally relies on risk pooling and community-rating rules, meaning changes in average medical spending can affect premiums across a broader group rather than only the people who use medical cannabis.
However, the findings do not prove that medical cannabis laws directly caused premiums to fall. The study was observational, and states that adopt such laws may differ from other states in ways that are difficult to measure. The researchers used statistical controls and a timing-sensitive model, but they acknowledged that unmeasured factors could still influence the results.
The analysis also had important limits. It examined individual-market plans rather than employer-sponsored insurance, and it used aggregate insurer financial data rather than tracking individual patients, diagnoses, cannabis use, or specific medical treatments. The study therefore cannot show whether cannabis itself reduced healthcare spending or identify which types of care might have contributed to the observed pattern.
Medical cannabis policy also varies considerably from state to state. Eligibility requirements, qualifying conditions, product rules, dispensary access, and oversight differ across jurisdictions. The National Conference of State Legislatures’ overview of state medical cannabis laws provides context for those differences.
The insurance finding should also be considered separately from claims about cannabis as a treatment. Evidence for medical uses differs by condition and product, and many state-authorized cannabis products have not undergone the same approval process as prescription medicines. The U.S. Food and Drug Administration’s guidance on cannabis and cannabis-derived products notes that the agency has approved specific cannabis-related medicines, but not cannabis itself as a treatment for any disease or condition.
Overall, the study offers evidence of an association between medical cannabis laws and lower individual-market health insurance premiums, with the estimated difference appearing several years after adoption. It does not establish a universal cost-saving effect, demonstrate that cannabis directly produced the savings, or show that the results apply to employer-sponsored insurance.
