Medical cannabis could save employers $22.9 billion annually, new study finds

As cannabis-centered healthcare becomes more common in states across the country, and as legislators begin to see the long-term healthcare savings that come with embracing medical marijuana care, we’re finally beginning to see what that means for individuals and job creators.

Leafwell’s latest study, published this week in Applied Health Economics and Health Policy, found that the gap in average total costs for employer-sponsored health insurance premiums grew between 2003 and 2022, strengthening the case that investing in cannabis care is a smart business move.

Key Findings

• Companies in states with medical cannabis laws had 3.4% lower premium costs for individual coverage plans compared to companies without such state laws.
  • Translated into dollars, the average premium costs for individual plans were $238 lower per employee, per year
• Similarly, companies in states with medical cannabis laws saw 2.9% lower premium costs for employee-plus-one coverage plans compared to companies without such state laws.
  • The average premium costs for employee-plus-one coverage plans were $348 lower per employee, per year comparatively
• A company with 50 employees in a state with medical cannabis laws could expect to spend $14,650 less on health insurance premiums per year compared to a similar-sized company in a state without a medical cannabis law.
• We used data from the Agency for Healthcare Research and Quality’s Medical Expenditure Panel Survey from 2003-2022.

Existing Research into Medical Cannabis Laws and Health

Leafwell’s research built on existing studies which had suggested a link between medical cannabis laws and lower health insurance costs, within the individual health insurance markets at the state level.

38 states in the US have Medical Cannabis Laws, and in 2023, there were approximately 4.1 million registered medical cannabis card holders (Boehnke and Colleagues (2024). There have been studies into states that adopted medical cannabis laws which show lower health insurance premiums for state-run markets (Cook and Colleagues, 2023), reductions in hospitalizations related to opioid dependence or abuse (Shi, 2017), and a 6% reduction in prescriptions for Medicare enrollees (Wen, 2018).

Leafwell’s Research into Medical Cannabis Laws and Health Insurance Costs

Our latest study sought to understand the impact of medical cannabis laws on private health insurance costs.

Over the first ten years of a state implementing medical cannabis laws, we found evidence of reductions in health insurance premiums for single and employee-plus-one coverage plans.

We were able to calculate that had all 50 states implemented medical cannabis laws, employers across the US would have experienced the following savings every year:

• $14.9 billion for single coverage plans
• $8 billion for employee plus one coverage plans

Employees would have seen the following savings each year, had all states implemented medical cannabis laws:

• $4.2 billion for single coverage plans
• $2.3 billion for employee plus one plans

What does this mean? If all 50 states had medical cannabis laws, the impact could have been a collective 0.65% reduction in our healthcare expenditure GDP. In 2022, healthcare spending accounted for 17.3 percent of US GDP, or $4.5 trillion—a reduction of 0.65 percent is a saving of $29 billion.

But enough about findings and hypothetical savings. What do medical cannabis laws mean for average Americans every day?

The Real-Life Economic Impact of Poor Health on Employers and Employees

Sarah Rosas* is the owner of Future Stars Academy— a small nonprofit that provides after-school tutoring to students from underserved communities. With a dedicated team of 70 passionate employees, Sarah has created an inspiring organization that’s transforming her community and empowering children to excel in their education and beyond.

But when Sarah was diagnosed with cancer, everything changed.

The emotional and financial toll threatened not only her well-being, but also the sustainability of her nonprofit. The mounting costs made her worry about whether or not Future Stars Academy would have a future of its own.

High-cost claims from ongoing treatment, frequent healthcare services, and hospitalizations were driving up Sarah’s healthcare premiums, increasing the financial burden on her small business. Every round of chemotherapy and every emergency room visit for things like severe pain, nausea, and anxiety, were not only draining her finances, but also putting a strain on the health plan she provided to her employees.

Then, Sarah turned to Leafwell, where she discovered the potential of medical cannabis as an alternative treatment.

We introduced her to our recent research study showing that in states with medical cannabis legislation, healthcare costs — particularly those related to employer-sponsored insurance — have significantly decreased. This research gave Sarah hope — not just for her health, but for the financial outlook of Future Stars Academy.

Instead of frequent, expensive ER visits for nausea and anxiety — each potentially costing thousands of dollars — Sarah began using medical cannabis to alleviate her symptoms. The monthly cost of medical cannabis treatment ranges from just $50 to $300, a fraction of what her emergency care would be.

For Sarah, this meant working with one of Leafwell’s palliative care specialists to come up with a treatment plan that would ease her anxieties about her health and give her more peace of mind knowing she was taking control of her healthcare.

For her nonprofit, it meant a significant reduction in healthcare costs, freeing up resources to continue supporting the students who depended on her organization.

Leafwell’s research didn’t just benefit Sarah on a personal level — it also highlighted a broader economic impact.

For a small business like Sarah’s, these resource savings were crucial and allowed her to continue providing valuable benefits to her employees while securing her nonprofit’s future.

Inspired by her experience and the compelling evidence from Leafwell, Sarah made the decision to integrate medical cannabis into her employees’ healthcare offerings.  She knew that by supporting the use of medical cannabis, she could not only improve her quality of life, but also offer her staff an affordable, effective treatment option that could prevent unnecessary healthcare costs.

Sarah’s journey is a powerful example of how businesses can benefit from the integration of medical cannabis into their healthcare plans — and it’s just one example of many.

It also exemplifies the profound impact that medical cannabis can have on reducing the costs and burdens of cancer care. By supporting patients and employers through informed choices, Leafwell is helping individuals manage their health more effectively and contributing to a broader economic ripple that can be felt across the healthcare system.

At Leafwell, we’re proud to support entrepreneurs like Sarah, helping them navigate the challenges of healthcare while continuing to make a positive impact in their communities.

*Name has been changed to protect patient privacy in accordance with HIPAA 

Why is Leafwell’s research study so important?

1. Better Access to Healthcare: If we know how medical cannabis can lower healthcare costs, it can help make these treatments available to more people and improve their health.
2. Saves Money: Our research helps guide decisions for governments and businesses, saving money and using healthcare resources more wisely.
3. Supports New Discoveries: Investing in cannabis research, helps us understand the science better, challenges old myths, and finds new ways to treat illnesses.

Finally, our research supports positive social changes. By looking at how cannabis laws affect healthcare costs, we can create policies that focus on improving public health and health equity.

Discover More

You can read Leafwell’s latest research, Measuring the Impact of Medical Cannabis Law Adoption on Employer-sponsored Health Insurance Costs: A Difference-in-Difference analysis, 2003-2022, for free and in full by clicking the button below.