The potential substitution of cannabis for prescription medication has attracted a substantial amount of attention within the context of medical cannabis laws (MCLs). However, much less is known about the association between recreational cannabis laws (RCLs) and prescription drug use. With recent evidence supporting substitution of cannabis for prescription drugs following MCLs, it is reasonable to ask what effect RCLs may have on those outcomes. We use quarterly data for all Medicaid prescriptions from 2011 to 2019 to investigate the effect of state-level RCLs on prescription drug utilization. We estimate this effect with a series of two-way fixed effects event study models. We find significant reductions in the volume of prescriptions within the drug classes that align with the medical indications for pain, depression, anxiety, sleep, psychosis, and seizures. Our results suggest substitution away from prescription drugs and potential cost savings for state Medicaid programs.
Keywords: Medicaid; cannabis; difference-in-differences; drug utilization.
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