Innovation in health care saves lives. But not all health innovations have enough evidence to actually benefit patients.

Barriers to innovation are often higher in illicit or restricted markets, including cannabis, stem cells and cryptocurrencies. Researchers face higher costs, limited access to raw materials and data, and stricter regulations.

Cannabis illustrates a particularly confusing tension between regulatory restrictions on one hand and research and innovation on the other.

While the U.S. federal government still classifies cannabis as having “no accepted medical use,” many states have legalized it for medical or recreational use. Meanwhile, the Department of Health and Human Services obtained a cannabis-related patent in 2003 covering potential medical uses of cannabis compounds for protecting the brain from damage or degeneration. The patent was exclusively licensed for commercialization.

Research and innovation on cannabis can take many forms. Clinical trials may study cannabis products as medical treatments, the effects of cannabis on its users, or factors related to abuse and dependence. Meanwhile, cannabis-related patents can be filed for wide-ranging purposes, such as chemical formulations, methods for production or new consumer products like edibles, beverages or vaporizers.

But do these innovations actually benefit consumers and patients?

We are economists studying how institutional changes affect innovation in different markets. Our recently published research found that legalization of recreational cannabis use appears to spur innovation, but primarily in ways that expand commercial opportunities rather than scientific understanding or health benefits for patients.

Cannabis’ evolving legality in the US

Cannabis is a plant that contains chemical compounds called cannabinoids. One such compound,........

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