Abstract
Initially introduced as an alternative medical treatment, cannabis has been conditionally legalized in most U.S. states. Using prescription drug claims as reported by small and large group insurers in the NAIC Supplemental Health Care Exhibit from 2010-2019, we examine the impact of medical and recreational cannabis laws on prescription drug expenditures of working-age individuals. We use a difference-in-differences framework and find significant reductions in prescription drug claims per enrollee of $34-42 annually in the small group insurance market following recreational cannabis legalization. While we do not observe similar reductions in claims in large group insurance markets, we find weak evidence that the reduced expenditures in small group insurance correspond with reductions in premiums indicating positive spillover effects from recreational cannabis for insured enrollees of small group insurance plans.
