Cannabis Crackdown Will Combat Opioids? Nope. #FactsMatter
Source: Cowen and Company
February 24, 2017
The Cowen Insight
Yesterday, Press Secretary Sean Spicer noted that while the Administration is supportive of medical marijuana, they view adult use as a separate issue that violates federal law, consistent with the views expressed by Jeff Sessions. The link suggested between cannabis and opioids contradicts current research. We expect State AG’s will aggressively defend their tax revenues in court.
State AG’s: Keep Your Hands Off Our Revenues
Given previous commentary from Attorney General Jeff Sessions on adult use of cannabis, the news yesterday is not entirely surprising. However, states that have approved cannabis for adult use (8 in total, with 4 operational and another 4 having approved via ballot initiatives in November 2016), have also been well-aware of this risk. Indeed, we noted in November the encouraging news that former AG Eric Holder had been retained by California as outside council; he would be well positioned to argue for a defense of the upcoming transition to adult use in CA (and after having left the Obama Administration noted a belief that cannabis should be regulated like alcohol and tobacco).
While support from CA will be critical, markets that are already open (CO, WA, OR, and AK) will likely be even more vocal, given the tax revenue and job growth the industry is driving. In Colorado, the biggest cannabis state in the country, total industry revenue totaled $1.3 bn in 2016 (+30% YoY), and generated nearly $200 mm in tax revenue. In Washington, which imposes a higher excise tax rate than Colorado, the state generated over $250 mm in excise tax revenue in 2016. Meanwhile, Oregon generated $60 mm in tax revenue as of December 2016 (well ahead of the estimated $16 mm the government had anticipated generating).
Cannabis Drives Declines in Opioids, Not the Other Way Around
In his comments Spicer noted that with “the opioid addiction crisis blossoming.the last thing we should be doing is encouraging people.” This assertion blatantly contradicts available research on the subject. Specifically, while research has currently been isolated to medical cannabis states, there is a clear and growing body of evidence that shows that in fact the opposite occurs. So, if medical cannabis is effective in combating opioid addiction, how can it also be true that it would drive opioid addiction when used recreationally?
A 2016 study from Columbia University (looking at 18 medical states from 1999-2013) concluded “we would expect the adverse consequences of opioid use to decrease over time in states where medical cannabis is legal.”
A 2016 study from the University of Michigan found that patients who used medical cannabis to control chronic pain reported a 64% decrease in their use of Vicodin, OxyContin and other prescription opioids.
A 2016 study from the University of Georgia found that the average physician wrote 12% fewer painkiller prescriptions for Medicare D patients than in states where cannabis was still prohibited.
A 2015 study from the Rand Corporation suggested a 20% decrease in admissions to treatment programs for opioid addiction in states that allowed medical cannabis dispensaries.
A 2014 study published in JAMA Internal Medicine found that death rates from opioid overdoses were 25% lower in states that had approved medical cannabis.
Cannabis is Hardly a Gateway Drug
As the above research suggests, far from being a gateway drug, legal cannabis looks to be quite effective in driving declines in opioid use and overdoses. This makes sense to us given the addiction profile of cannabis relative to a wide variety of other substances (despite cannabis’ classification as a Schedule I controlled substance). Indeed, research published in 1994 by notable anti-tobacco scientists showed that across a number of addiction measures cannabis not only scored well below illicit drugs like heroine and cocaine, it also fell below caffeine across all measures other than intoxication.