When it comes to marijuana legalization and car insurance, the logic is pretty straightforward. As more states legalize the use of marijuana, there is sure to be an increase in vehicle accidents and fatalities, which would drive up car insurance premiums.
But is that actually the case? It’s too early to tell. Keep reading to learn about car insurance and legal marijuana.
- One study analyzing the effects of medical marijuana on car insurance found a decrease in accidents and cheaper premiums.
- Other studies on recreational marijuana point to spikes in accidents and fatalities.
- No matter which trend holds, your premiums will go up if convicted of a DUI.
Does marijuana legalization impact car insurance premiums?
Two critical studies on the impacts of marijuana legalization seem to draw contrary conclusions.
A study published by Health Economics in 2022 reviewed the effects of medical cannabis on accidents and insurance premiums and found that insurance premiums fell by about $22 per year in jurisdictions where medical marijuana was legalized.
Cameron Ellis, a lead author of the study, says the results are surprising but understandable. Ellis and co-authors Martin Grace, Rhet Smith and Juan Zhang, looked at ZIP-code-level insurance premium data from 2014 to 2019. There was an overall positive effect on auto safety in the areas analyzed.
One of the factors likely at play, says Ellis, is that people are substituting marijuana for alcohol.
“We found that premiums went down more in areas that had high levels of DUI prior to legalization,” he adds. “Another possibility is that when people consume them both together, they tend to stay home since you can’t smoke medical cannabis in bars.”
Medical cannabis legalization resulted in projected healthcare savings
The researchers estimate that medical cannabis legalization reduced health expenses related to car accidents by about $820 million in states that have legalized it. They said an additional $350 million could be saved if legalization were rolled out nationwide. This is likely the key contributor to the average $22 lowering of insurance premiums.
“This number sounds really small, but a lot of people have auto insurance, so it adds up,” Ellis says.
The researchers did not extend their study to recreational marijuana.
Does recreational marijuana pose a higher risk for drivers?
A study conducted by the Insurance Institute for Highway Safety, published in the Journal of Studies on Alcohol and Drugs in July 2022, drew a different conclusion on recreational marijuana. It found that traffic crash injuries rose almost 6% in five states where the use of recreational marijuana was legalized – and fatal crash rates jumped 4.1%.
“The legalization of marijuana doesn’t come without a cost,” lead researcher Charles M. Farmer concludes in the findings. “Users who previously avoided driving high may feel it’s okay after legalization.”
In which states is recreational marijuana use legal?
The drive to legalize the use of marijuana has spread across the country in recent years. At least 38 states have made it lawful to use the substance for medical or recreational purposes – or both.
In the past year, five states have had proposals on the ballot to legalize recreational marijuana. Voters approved the expansion in Maryland and Missouri, while proposals were rejected in Arkansas, North Dakota and South Dakota.
That brings the total number of states allowing recreational marijuana to 21, plus the District of Columbia. Those states are:
- California
- Alaska
- Nevada
- Oregon
- Washington
- Maine
- Colorado
- Montana
- Vermont
- Rhode Island
- New Mexico
- Michigan
- Arizona
- New Jersey
- Connecticut
- Massachusetts
- Illinois
- Maryland
- New York
- Missouri
- Virginia
- District of Columbia
In which states is medical marijuana use legal?
Medical marijuana is currently allowed in a broader range of states. In addition to the states listed above, medical marijuana is permitted in the following states:
- Hawaii
- Delaware
- New Hampshire
- Minnesota
- Georgia
- Louisiana
- Arkansas
- Florida
- North Dakota
- Ohio
- Pennsylvania
- Iowa
- West Virginia
- Oklahoma
- Utah
- Mississippi
- South Dakota
- Alabama
- Kentucky
Are any states currently considering marijuana legalization?
Legalizing recreational marijuana is being pushed in several holdout states, and legalization efforts are at various stages in Minnesota, Pennsylvania and Ohio.
In Oklahoma, voters rejected a ballot in March to legalize recreational weed by a comfortable margin, even though nearly 10% of the population already has a medical marijuana card.
What happens to premiums if you get charged for driving under the influence of marijuana?
While the jury may still be out on whether legalizing marijuana will contribute to a spike in insurance premiums, one thing is sure. If you’re convicted of driving under the influence of weed, you will see your insurance rates soar.
After a DUI—whether from weed or alcohol—you can expect your rates to double or increase by even more, depending on your state. The national average cost of a full coverage policy is $2,076. Following a DUI conviction, the average cost of car insurance is $4,291.
The complication, though, is that proving intoxication by marijuana, whether it’s medicinal or recreational, remains problematic.
According to the Insurance Information Institute, there is no agreed-upon impairment limit for THC, the main active ingredient in cannabis. Furthermore, there are currently no scientifically accepted roadside impairment tests. Instead, arresting officers are more likely to use a set of “behavioral evaluations” to determine impairment.
Final thoughts: Pot legalization and car insurance
It will take time and further study to determine exactly what impact marijuana legalization will have on insurance premiums. But one thing is certain: If spreading legalization does result in an appreciable spike in impaired driving, accidents and fatalities, premiums will rise in step.
Resources & Methodology
Sources
- Wiley Online Library. “Medical cannabis and automobile accidents: Evidence from auto insurance.” Accessed April 2023.
- Insurance Institute for Highway Safety. “Legalization of Marijuana Linked to Increased Traffic Crashes, Fatalities.” Accessed April 2023.
- Insurance Information Institute “Background on Marijuana and Impaired Driving.” Accessed April 2023.
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