New Study Suggests Link Between Cannabis Legalization And Decline In Workers Comp Claims

A new research paper from the National Bureau of Economic Research suggests a connection between marijuana legalization and a decline in workers’ compensation claims.

The study, conducted by a team of researchers from  William Paterson University, Temple University, University of Cincinnati-Blue Ash and the RAND Corporation, examined “the effect of state recreational marijuana laws (RMLs) on workers’ compensation (WC) benefit receipt among adults 40-62 years.”

“Marijuana has increasingly become legalized in the United States. We study the effects of recent state laws that legalize the recreational use of marijuana on work capacity—the ability to productively engage in paid employment—among older working-age adults,” the researchers wrote in the study’s introduction. “We rely primarily on Workers’ Compensation (WC) benefit receipt as a signal of diminished work capacity; WC benefits are received when individuals become injured or ill while working and require time away from work to recover. In addition to providing a useful measure of labor productivity and work capacity, injuries incurred while working represent substantial costs to the national economy.”

They found that workers’ compensation receipt “declines in response to [recreational marijuana laws’] adoption both in terms of the propensity to receive benefits and benefit amount.

“We estimate complementary declines in non-traumatic workplace injury rates and the incidence of work-limiting disabilities,” they wrote. “We offer evidence that the primary driver of these reductions is an improvement in work capacity, likely due to access to an additional form of pain management therapy.”

The results of their study found a 0.18 percentage decline workers’ compensation benefit propensity, which they said “corresponds to a 20.0% reduction in any [workers’ compensation] income,” after states legalize recreational marijuana for adults.

“These results are not driven by pre-existing trends, and falsification exercises suggest that observing estimates of this magnitude is statistically rare,” they wrote.

In conclusion, the authors said that the findings “suggest potentially important benefits to older workers and society at large.”

“Broadly, we show non-trivial improvements in work capacity, which we proxy with [workers’ compensation] benefit receipt and various other metrics in our mechanism analysis, among older adults,” they said. “The ability to work likely has positive benefits to workers themselves due to improved earning capacity, and overall health and life satisfaction. Older workers are at elevated risk of leaving the labor market due to poor health…Keeping workers actively engaged in paid employment can have positive spillovers to Social Security and can reduce costs to employers who will experience reduced [workers’ compensation] costs.”

Accessibility and Legality of Cannabis and the Workforce

As more and more states have embraced legalization, there is a growing body of research examining its effect on labor issues. Last fall, a study found that workers in Canada who used cannabis were not more likely to experience a workplace injury.

The study, which came via researchers at the University of Toronto, revealed “no evidence that cannabis users experienced higher rates of work-related injuries.”

The study was, according to the authors, “the largest population-based cross-sectional study examining the association between past-year cannabis use and work-related injuries.”

“We found that workers reporting using cannabis more than once in the past year were no more likely to report having experienced a work-related injury over the same time period in a large cohort of the Canadian working population,” they wrote.