A new study has found that states that have legalized medical marijuana saw a reduction in average auto insurance rates, suggesting that medical cannabis legislation reduces
To conduct the study, researchers analyzed automobile insurance rate data collected from 2014 to 2019. The study found that in states that have legalized medical cannabis, auto insurance premiums decreased by an average of $22 per year. The authors of the study say that the research suggests that legalizing medical cannabis reduces drunk driving because many drivers are substituting marijuana for alcohol. With fewer drivers impaired by alcohol behind the wheel, auto insurance claims go down. The reduction in payouts by insurance companies brings down auto insurance rates for drivers.
Cameron Ellis, a co-author of the study and researcher at Temple University,
“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.
$1.5 Billion in Auto Insurance Savings
While the reduction in annual auto insurance premiums may not seem significant, the decline in rates suggests that legalizing medical marijuana makes roadways in affected states safer. In addition to reducing insurance rates, safer roads result in savings for costs associated with auto accidents.
The study found 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,” for a combined total of $2.4 billion in potential premium cost reductions for drivers if medical cannabis were legalized nationwide.
“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 authors of the study wrote.
The authors note that prior research into the effect legalizing marijuana has on road safety has focused on the association between cannabis reform measures and traffic fatalities. The new study’s analysis of auto insurance data gives a more complete view of overall road safety.
“The existing literature misses over 99.5 percent of auto crashes,” the authors wrote. “Auto insurers cover 67 percent of all medical and property damage from automobile accidents. Through this lens, we paint a more comprehensive picture.”
When analyzing the insurance data by zip code, the researchers found that the reduction in auto insurance rates was “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.”
Results of Choosing Cannabis Over Alcohol
Ellis noted that in addition to the possibility that drivers are substituting cannabis for alcohol, those who use marijuana and alcohol could be “more likely to stay home or go to house parties, instead of drinking at bars.”
Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws, said that the results of the study 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.”
Results of the new study, “Medical cannabis and automobile accidents: Evidence from auto insurance,”