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The Effects of Marijuana Legalization

More states are legalizing marijuana, either for medical use or recreational use. As of 2014, only two states fully legalized it for all users – Colorado and Washington – but 18 states allow it for medical reasons. Even if you don’t partake of it, it can still affect you.

It’s important to understand its effects on the insurance and banking industries, since more states are likely to begin the legalization process in the coming years.

Auto Insurance

Overall, car insurance rates may actually drop as marijuana becomes legal in more states. A recent study by professor Daniel Rees found that states with legal medical marijuana actually experienced a 12 percent decrease in alcohol-related car accidents. These states also had decreased alcohol sales, which indicates fewer drunk drivers. At the same time, marijuana related accidents did not increase, perhaps because marijuana doesn’t impair judgment to the extent of alcohol.

This doesn’t mean you are safe from an insurance increase. Driving under the influence of marijuana still results in a DUI citation and higher insurance rates and, in the words of NY Attorney Isaac Abraham, “a DWI/DUI conviction stays on your record forever”.

States like Washington are actively working to implement a reliable method for measuring the amount of THC in the blood during traffic stops.

Life and Health Coverage

Life and health coverage hasn’t been as positive towards the changes. Many insurance companies are giving marijuana users the higher “smoker’s rate,” even though most medical and some recreational marijuana is ingested and not smoked. A single positive marijuana test on your record can result in these increased rates.

Even those insurance companies not assigning a smoker’s rate may up the premium or result in a drop of coverage if tested THC levels in the policy holder are higher than what the insurance deems appropriate.

The Banking and Real Estate Industry

Financial institutions and landlords are dealing with the most curious of the marijuana dilemmas – can they lend money, provide banking services, or rent property to a business that is technically illegal on the federal level? Currently, the feds are taking a watch-and-see approach to state legalization, but something as simple as a new president can change that quickly.

Even though this currently is affecting the average consumer, it will eventually lead to new industry regulations in banking and real estate which could affect you.


Overall, the move to legalize marijuana has gone smoothly in most states that have implemented it. Time is necessary to understand the full implications, and whether it is something that will have a major impact on your life.


This is a guest blog from New York Attorney: Isaac Abraham.