Cannabis legalization might reduce sales of conventional pharmaceuticals by billions of dollars, according to a US study released on Wednesday.
In their study, “U.S. Cannabis Laws Set to Cost Pharma Companies Billions,” a team from the University of New Mexico’s Department of Economics studied how the stock returns of publicly traded pharmaceutical companies responded to medical and recreational cannabis legalization events.
They found that stock market returns were 1.5-2% lower 10 days following a cannabis legalization event, and that the annual sales implications of this reduction were in the billions.
Other studies have determined that access to cannabis reduces opioid drug use, but this is the first study to analyze the overall effect of cannabis on pharmaceutical companies across all products and patient types.
Unlike other drugs, which are designed to target and approved for specific conditions, cannabis is used to treat an astonishing range of conditions, including physical symptoms such as headaches and muscle spasms as well as conditions mental illnesses such as depression and anxiety or menstrual pain.
The cost of pharmaceutical drugs remains a major barrier to accessing health care for many Americans and a significant financial burden for state and federal governments. Cannabis might therefore be part of the solution.
The study concludes that cannabis is acting as a new competitor in medical markets.
Extrapolating the results to full federal legalization, the authors estimate a reduction in sales of conventional pharmaceuticals of almost 11%. The substitution of conventional drugs for cannabis seems to be happening even without standardization, clear dosing instructions, or health insurance coverage.
In addition to depressing the value of publicly traded pharmaceutical companies, the authors found that recreational legalization had more than twice the impact of medical legalization, likely due to the much larger population affected, as the Access to medical cannabis is generally restricted to people with serious illnesses.
