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IPFS News Link • Big Pharma

Cannabis legalization in US projected to cost big pharma billions

•, By Rich Haridy

 And, if the US were to legalize cannabis across the whole country, pharma stocks could rapidly drop by over 10 percent.

Over the last few years, as cannabis prohibitions have gradually lifted across the United States, researchers have chronicled a number of interesting changes in drug use behaviors. For example, several studies have seen a distinct drop in opioid prescriptions after medical cannabis was legalized in a given state. Even more generally, some research has linked access to medical cannabis with an overall drop in prescription drug use.

So a trio of economists, from the California Polytechnic State University and The University of New Mexico, set out to try and quantify the financial impact of cannabis legalization on the pharmaceutical industry. The researchers looked at the impact of medical and recreational cannabis law changes on stock market returns for pharmaceutical companies over the past 25 years.

The study analyzed 45 cannabis legalization events, both medical and recreational, in US states since 1996. The findings revealed stock market returns for a pharmaceutical company dropped by an average of nearly 2% following any cannabis legalization event. Across all pharma companies, the researchers estimated this equaled a drop in annual drug sales of around $3 billion for each individual legalization event.