Auto insurance premiums decreased in states following the legalization of medical marijuana, according to a new study that builds on existing research signaling that cannabis reform is associated with reduced risk of dangerous driving—contrary to prohibitionist arguments.
The study, published this month in the journal Health Economics, analyzed insurance data from 2014 to 2019. It found that premiums dropped by about $22 per year on average after states enacted legalization—and the study authors think that may have something to do with reduced drunk driving in those states, signaling a possible substitution effect whereby people switch from alcohol to cannabis.
A $22 premium reduction might not seem significant on its face, but the reason for that decline is what’s important. Access to medical cannabis seems to be linked to better road safety, which translates into significant cost savings—both collectively for people paying insurance premiums and overall for health-related expenditures related to auto accidents.
The analysis determined 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”—a combined total of $2.4 billion in potential payment reductions for drivers under nationwide medical cannabis access.
“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 said.
Fewer health expenditure auto claims has also meant about $820 million annually in cost savings in legal medical marijuana states, the study says. And there’s the potential of an additional $350 million in annual savings if cannabis is legalized across the country.
“Our results indicate that the legalization and access to medical cannabis positively impacts auto safety.”
What makes this study unique is that it focuses on auto insurance trends, whereas most research into the relationship between marijuana reform and road safety have looked at data on traffic fatalities. That paints an incomplete picture, however, the researchers said, because a small fraction of car accidents involved fatalities.
“The existing literature misses over 99.5 percent of auto crashes,” the new study says. “Auto insurers cover 67 percent of all medical and property damage from automobile accidents. Through this lens, we paint a more comprehensive picture.”
The zip code-based analysis found that reductions in annual premium costs 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,” the study says. “This latter result is consistent with substitutability across substances that is argued in the literature.”
Cameron Ellis, a co-author and researcher at Temple University, told Marijuana Moment that he believes “the main takeaway is that, even though driving while high is dangerous, medical cannabis legalization can actually make the road safer by reducing the prevalence of drunk driving enough to outweigh it.”
“Our results indicate the increase in auto safety is due, at least partially, to a decrease in DUI of alcohol.”
But it’s not just the substitution effect theory that’s in play. While studies have consistently found that people use cannabis as a substitute for other drugs, including alcohol and prescription drugs, the other factor could be that even people who use both alcohol and marijuana are “more likely to stay home or go to house parties, instead of drinking at bars,” Ellis said.
“The individual effects we find are very small ($22 per year on your auto insurance), but they definitely add up since so many people have auto insurance,” he said.
Researchers from the University of Arkansas and Eastern Kentucky University also participated in the study.
Paul Armentano, deputy director of NORML, told Marijuana Moment that the new findings are “consistent with those of prior analyses assessing the relationship between medical cannabis access and traffic safety showing no uptick in motor vehicle accidents, and in some instances, a downturn in accidents—particularly those specific to those driving under the influence of alcohol or opioids.”
A separate recent study found that states that have enacted legalization are seeing less driving under the influence of marijuana than states that have maintained criminalization.
The study’s key limitation is that it’s based on self-reported DUIC data, but the results still run counter to both prohibitionist arguments against legalization and a recent congressionally enacted directive on where public awareness campaigns should be targeted amid the reform movement.
President Joe Biden signed a large-scale infrastructure bill late last year that included an amendment encouraging states that have enacted legalization laws—and only those states—to educate people about impaired driving. That measure was criticized by advocates who similarly want to discourage driving under the influence of cannabis but who also feel that any public education campaigns on the issue should be holistic, rather than singling out states that have legalized.
Experts and advocates have emphasized that evidence isn’t clear on the relationship between THC concentrations in blood and impairment.
A study published in 2019, for example, concluded that those who drive at the legal THC limit—which is typically between two to five nanograms of THC per milliliter of blood—were not statistically more likely to be involved in an accident compared to people who haven’t used marijuana.
Separately, the Congressional Research Service in 2019 determined that while “marijuana consumption can affect a person’s response times and motor performance…studies of the impact of marijuana consumption on a driver’s risk of being involved in a crash have produced conflicting results, with some studies finding little or no increased risk of a crash from marijuana usage.”
Another recent study found that smoking CBD-rich marijuana had “no significant impact” on driving ability, despite the fact that all study participants exceeded the per se limit for THC in their blood.