Case Study: Medical Cannabis as a Prescriptive for What Ails Zimbabwe

By Beau R. Whitney, Vice President, and Senior Economist, New Frontier Data

The impact which medical cannabis can have on state health-care spending is well documented. Previously, New Frontier Data has published data about how states offering legal access to medical cannabis have lower health-care allocations. In medical cannabis states where pain is a permitted qualifying condition, pain patients represent an outsized share of program participants. Furthermore, government spending on pain-related medications was 11% lower in medical cannabis states than in non-legal markets.

U.S. spending on pain medication is expected to surpass $16 billion in 2019, at a growth rate of 13% since 2016. As U.S. spending on pain management continues to rise, patients are increasingly turning to cannabis as an alternative therapy. The use of cannabis to treat pain was affirmed by the U.S. National Academies of Sciences, which in 2017 concluded that there is “substantial evidence that cannabis is an effective treatment for chronic pain in adults”.

As cannabis reforms are deployed globally, many countries are interested in the potential economic benefits of medical cannabis on their local economies and health-care spending. New Frontier Data recently presented its Africa Regional Hemp and Cannabis Report: 2019 Industry Outlook at the InterCannAlliance Africa conference in Victoria Falls, Zimbabwe. Representatives from Zimbabwe, Liberia, Rwanda, Uganda, and several other sub-Saharan African countries were interested to learn what influence cannabis could have on their health-care spending.

In a detailed analysis of the Zimbabwean market, for example, medical cannabis is forecasted to have a significant impact on the overall economy. The Zimbabwean government is allocating $408 million in its 2019 budget for health-care spending. In addition, 25% of the country’s total health-care spending is done out-of-pocket by individuals. If Zimbabwe experiences a similar reduction in overall health-care spending as seen in the U.S. by deploying medical cannabis, it could save $40 million. Individual Zimbabweans would also benefit from subsequently having more disposable income.

Zimbabwe’s is a consumer-based economy in which consumer spending makes up 77.6% of the total GDP. By keeping more money in the pockets of consumers, additional positive economic effects could be expected throughout the economy.

Assuming the health-care savings experienced in the U.S. are also realized in other regions, the potential reduction of health-care expenditures at both the government and consumer levels could redefine how cannabis is viewed globally.