Do Medical Cannabis Laws Lower Health Insurance Costs? What a Study Found

A look at the economics — and at how to read this kind of research.

Could legalizing medical cannabis help bring down health insurance costs? A 2024 study set out to measure exactly that, and its findings are genuinely interesting — though, as with any economic analysis, the details and the caveats matter.

What the Study Found

The research, published in the journal Applied Health Economics and Health Policy, examined nearly two decades of data — from 2003 to 2022 — on employer-sponsored health insurance costs across U.S. states. It compared states that adopted medical cannabis laws against states that did not.

The headline result: states with medical cannabis laws had lower employer-sponsored health insurance premiums. Specifically, the study found about a 3.4% lower average premium for single-coverage plans, and about a 2.9% lower premium for employee-plus-one plans, compared with states without such laws. In dollar terms, the researchers estimated savings on the order of a few hundred dollars per employee per year. Scaling that up, they projected that if all 50 states allowed legal medical cannabis access, employers and employees could collectively save on the order of $29 billion per year on health insurance — though it's important to understand that figure is a projection, not an observed result.

A Proposed Explanation

Why might medical cannabis access be linked to lower premiums? The most commonly suggested explanation — and one this and related research points to — is that some patients use cannabis in place of other, costlier treatments, including opioid painkillers, which may reduce overall healthcare spending over time. Some studies have also noted that, on average, cannabis users tend to show certain lifestyle patterns associated with lower healthcare costs. It's worth being clear, though, that these are proposed mechanisms. This study measured the association between cannabis laws and premiums; it did not directly prove what caused the difference.

How to Read This Research

Two things are important for putting this study in context.

First, this is a study of correlation at the state level. It found that states with medical cannabis laws tended to have lower premiums — but many things differ between states, and an economic analysis like this, even a well-designed one, shows an association rather than definitively proving cause and effect. The researchers also noted that the premium reductions became most apparent several years after the laws took effect, not immediately.

Second, transparency matters here: this study was conducted by researchers affiliated with Leafwell, a medical cannabis technology company. The study was peer-reviewed and published in an established academic journal, which is meaningful. But it is not an independent academic analysis, and a reader should weigh the findings with that affiliation in mind — as they would with any industry-connected research.

With those caveats, the takeaway is a measured but real one: there is published, peer-reviewed evidence of an association between medical cannabis laws and lower employer health insurance premiums. That's a meaningful data point in the policy conversation — and a reason for more independent research — rather than a settled economic fact.

Reference: Measuring the Impact of Medical Cannabis Law Adoption on Employer-Sponsored Health Insurance Costs: A Difference-in-Difference Analysis, 2003–2022. Applied Health Economics and Health Policy, 2024. (Study conducted by researchers affiliated with Leafwell, a medical cannabis company.)

This article is for general information only and is not medical, financial, or policy advice. It describes a single economic study; findings reflect associations and projections rather than proven outcomes.