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Medical cannabis and automobile accidents: Evidence from auto insurance

Cameron Ellis (), Martin Grace, Rhet Smith and Juan Zhang

Health Economics, 2022, vol. 31, issue 9, 1878-1897

Abstract: While many states have legalized medical cannabis, many unintended consequences remain under‐studied. We focus on one potential detriment–the effect of cannabis legalization on automobile safety. We examine this relationship through auto insurance premiums. Employing a modern difference‐in‐differences framework and zip code‐level premium data from 2014 to 2019, we find that premiums declined, on average, by $22 per year following medical cannabis legalization. The effect is more substantial in areas near a dispensary and in areas with a higher prevalence of drunk driving before legalization. We estimate that existing legalization has reduced health expenditures related to auto accidents by almost $820 million per year with the potential for a further $350 million reduction if legalized nationally.

Date: 2022
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https://doi.org/10.1002/hec.4553

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