A new study on marijuana legalization’s effect on workers’ compensation finds that while the policy change is associated with a “gradual increase” in workers’ comp claims, the average cost per claim in fact fell after the policy change—as did patient use of prescription drugs, especially opioids and other painkillers.
The report, from the nonprofit Workers Compensation Research Institute (WCRI), tracks what researchers described as “complex effects” that adult-use marijuana legalization has on both work injury risks themselves and the costs of workers’ compensation claims.
One one hand, for example, the study says that recreational marijuana laws (RMLs) “led to a gradual increase in frequency of workers’ compensation claims in the years following RML adoption.”
On average, over a period of 1.7 years after legalization, states saw the frequency of workers’ comp claims increase by 7.7 percent. After five years, that increase had jumped to 15 percent.
On the other hand, the report says, “the average medical payment per claim decreased after the adoption of RMLs, partly driven by decreases in prescription utilization and costs.” Specifically, it says adult-use cannabis legalization “reduced medical payments per claim by $207 (or 5.7 percent) at 12 months of maturity.”
The cost savings resulted in part from a 13.9 percent reduction in prescriptions, including an 11.7 percent drop in pain medication prescriptions per claim. “The proportion of claims with opioid prescriptions dropped by 9.7 percent,” authors added. “We also found decreases in sleep aid prescriptions.”
The new 51-page report drew on data from 31 states, looking at workers’ comp claims filed between October 2012 and March 2022.
The report lists four key findings:
“Following RML adoption, (1) claim frequency increased; (2) per-claim medical payments declined; (3) the number of pain medication prescriptions, including opioid prescriptions, declined; and (4) there was no change in indemnity benefits nor total claim duration, except for in the later years after RML adoption.”
WCRI said in a press release that the findings “can inform debates on issues such as marijuana rescheduling, occupational treatment guidelines, state THC (tetrahydrocannabinol) regulations, or marijuana taxes.”
“This research is important as marijuana use continues to rise,” said Ramona Tanabe, the institute’s president and CEO. “Our study highlights the complex effects RMLs have on work injury risk and workers’ compensation claim costs. This information is relevant for policymakers, insurance carriers, medical providers, labor advocates, and employers as they navigate these evolving challenges.”
As for why workers’ comp claims increased in frequency in legal states, the report posits that they “likely occurred due to recreational use of marijuana leading to intoxication or withdrawal symptoms at work.”
But marijuana may have also made those claims less expensive.
Regarding the lower costs per claim following legalization, the report says the “declines were likely driven in part by lower per-claim payments for pain medication prescriptions, a finding that is in line with previous work documenting that marijuana can be used for the treatment of pain in non-workers’ compensation populations.”
“In addition, in the longer run, RMLs led to reductions in the duration of temporary disability, which in combination with reduced medical payments ultimately translates into small reductions in total per-claim costs,” the study says. “The longer-term effect on [temporary disability] duration could reflect RMLs contributing to faster restoration of individuals’ work capacity, as fewer injured workers may end up on chronic opioids.”
In addition to looking at the frequency and costs of workers’ compensation claims, the new report also offers some policy recommendations. For example, it suggests capping THC levels “to reduce the potency of the product and, in turn, the risk of intoxication or hang-over effects that may lead to injuries.”
It also encourages increasing taxes on cannabis “to reduce marijuana use,” expanding employee education and assistance programs, installing additional infrastructure to prevent injuries and even stepping up zero-tolerance workplace drug policies and testing protocols.
“Our findings provide new insights into the impact of recreational marijuana legalization on workers’ compensation systems,” the report concludes. “Given the policy trends and the very high support for legalization of marijuana among Americans (nearly 70 percent of adults in 2023 supported legalization), marijuana use and legalization will likely expand over time. Future work on this topic may be needed as the marijuana policy landscape continues to evolve.”
In 2021, a separate study by the National Bureau of Economic Research found that adult-use cannabis legalization was associated with an increase in workforce productivity and decrease in workplace injuries.
Those researchers looked at the impact of recreational cannabis legalization on workers’ compensation claims among older adults, observing declines in such filings “both in terms of the propensity to receive benefits and benefit amount” in states that have enacted the policy change.
They further identified “complementary declines in non-traumatic workplace injury rates and the incidence of work-limiting disabilities” in legal states.
“We offer evidence that the primary driver of these reductions [in workers’ compensation] is an improvement in work capacity, likely due to access to an additional form of pain management therapy,” says the earlier study, which received funding from the National Institute on Drug Abuse (NIDA).
A 2020 study, meanwhile, found that legalizing medical marijuana led to fewer and cheaper workers’ compensation claims. Researchers from the University of Cincinnati Ash Blue College and Temple University concluded that permitting medical cannabis “can allow workers to better manage symptoms associated with workplace injuries and illnesses and, in turn, reduce need for [workers’ compensation].”
In 2022, the U.S. Supreme Court declined to take up a pair of cases concerning workers’ compensation for medical marijuana.
Other research from 2023 into employee marijuaan use found that workers who used the drug off the clock were no more likely to experience workplace injuries compared to those who didn’t consume cannabis at all. However, people who indulged during work hours are nearly twice as likely to be involved in a workplace incident than both non-users and off-duty users.
Separately, an analysis last year of five years’ worth of federal health survey data by researchers at the Centers for Disease Control and Prevention (CDC) found that employees in the food service and hospitality industries were some of the most common consumers of marijuana among U.S. workers.
People in arts, design, entertainment, sports and media occupations also reported comparatively high rates of past-month cannabis use, as did workers in construction and extraction. Among those least likely to report marijuana use, meanwhile, were law enforcement, health care providers and workers in libraries and education.
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