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Medical Cannabis Legalisation Could Save US Billions in Health Insurance Reductions

US companies in states that have moved to legalize medical cannabis have lower average health insurance costs, according to a new study by Leafwell.

The research, Measuring the Impact of Medical Cannabis Law Adoption on Employer-sponsored Health Insurance Costs: A Difference-in-Difference Analysis, examines the financial impact of medical cannabis laws on employer-sponsored health insurance premiums.

Drawing on data from the Medical Expenditure Panel Survey (2003-2022), conducted by the Agency for Healthcare Research and Quality, it highlights significant healthcare cost savings for employers in states that have enacted medical cannabis laws.

According to the data, companies in states with a medical cannabis framework saw 3.4% lower premium costs for individual coverage plans compared to states without such laws, translating to an average saving of $238 per employee annually.

For employee plus-one plans, costs reductions were 2.9% lower, equating to annual savings of $348 per employee.

These cost reductions would mean a company of 50 employees would save around $14,650 per year in health insurance premiums, equating to around $14.9bn across the US if all states had medical cannabis markets.

Should medical cannabis be legalized at a federal level, the research predicts that US healthcare expenditures could be reduced by 0.65%, the equivalent of $29bn annually.

Given that healthcare accounted for 17.3% of U.S. GDP in 2022, this reduction would have a significant economic impact.

“Because medical cannabis has become integrated into healthcare, its impact is evident,” said Leafwell Chief Medical Officer, Dr. June Chin.

“This report strengthens the case that investing in cannabis care isn’t just beneficial to patient care, it’s also good for business efficiency. By including cannabis in insurance plans, employers can foster a more inclusive and supportive work environment, enhance employee satisfaction, and ultimately contribute to a healthier, more resilient workforce.”

To download the report, please visit here.

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