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This paper provides suggestive, but not definitive, evidence of the potential budgetary effect to the state of California of an increase in marijuana use associated with legalization for marijuana on health care costs. Estimates are focused on scientifically established health harms for which data is readily available, including the number of dependent users, treatment costs, emergency room visits, and hospitalizations. The exercise shows that the rise in health care expenditures associated with scientifically established health harms known to be associated with use are likely to be small relative to the expected revenue and cost-savings associated with reductions in criminal justice savings. However, the human effects, as measured in terms of lost lives (to car fatalities) and dependence are not estimated to be small. Importantly, the potentially most significant health care costs for California taxpayers would come out of areas where the science has not reached a consensus, namely the causal effects of marijuana on psychoses, schizophrenia, and drugged driving. As the scientific literature regarding these health harms in particular develops further and reaches a consensus regarding the causal impact of marijuana use on the development, progression, and treatment of specific problems, our knowledge of the actual health care expenditure associated with marijuana use will be more precise and a better cost-benefit calculation may be made.

The research in this report was conducted by the RAND Drug Policy Research Center.

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