Legalization Leaves Medical Marijuana on Life Support
According to an annual government report prepared by the Marijuana Enforcement Division (MED) in Colorado and released this past Monday, in 2018 the state sold nearly twice as much adult-use cannabis as it did medical marijuana in an ongoing trend that we fear may be a sign of things to come – a consequence of the “recreational” cannabis reform that we now see surging state-by-state across the nation. The MED says that 288,292 pounds of legal weed were sold last year on the rec side of the market, while 147,863 pounds were sold to patients on the medical side. As you can see, medical marijuana in Colorado is hardly on life support, yet, but when you compare the numbers above to 2017, you see that the amount of rec weed sold in ’18 jumped by roughly 50,000 pounds while the amount of medical pot dropped by about 25,000 pounds – that is a 75% shift in the spending gap between the two sub-markets. If this trend continues as is, this would be the part on the graph where future analysts say, “Yep, that’s where medical marijuana stopped thriving and started dying.”
Backing this up is the fact that Supply is dwindling as quickly as Demand. Just 25% of the legal cannabis grown in Colorado is destined for the medical market and the MED reports that medical marijuana licenses dropped statewide by 8% in 2018, while recreational licenses continued a steady 3% rise.
Since leading the pack by legalizing the adult use of cannabis back in 2014, lawmakers in Colorado have seen little reason to rock the recreational boat as the state itself just recently surpassed $1 Billion in total cannabis revenues in just the fifth year under the new law – its cut of the $6.5 Billion+ generated so far by the trailblazing weed industry. So the powers that be in Colorado likely will not come to the rescue of the state’s medical marijuana market – but does it matter?
ALL MARIJUANA IS MEDICAL
While all states diving into recreational weed would love to see the financial success that Colorado has enjoyed so far, it is important to remember that cash does not ever grow on trees, but medicine does and grassroots advocates are concerned that the erosion of the word “medical” from most marijuana markets will drive retail prices even higher and will severely limit the number of options for cannabis cultivated and processed purely for therapeutic reasons. A study released just last month in the Journal of Psychoactive Drugs surveyed 1,000 Colorado-based cannabis users exclusively from the state’s rec market. Researchers found that 65% of respondents admitted that they use “rec” weed to alleviate aches and pains, and 74% said that it helps them sleep. I can relate to both of those forms of self-medicating and I too stick to the recreational side of my state’s cannabis market… mostly because my state – California – has all but murdered its once great medical marijuana market.
That is the danger. If a vast majority of people say that whatever strains the dispensary chooses to hype that week happen to get the job done for them, then it is hard to enact change. I feel blessed that after all these years, a half a bowl of Blue Dream will have me sleep all night long, but some people need very specific blends of cannabinoid profiles delivered in a very specific way to treat specific ailments. CBD in California is a perfect example of how medical patients are being left out of legalization.
As California slowly staggers through the process of licensing new operators in its legal industry, tens of thousands of cultivators who once drew income from the state’s old medical marijuana market are now left out. The ones who did get in faced such a high cost of entry and now a higher cost of doing business that they are being forced to only plant high-yielding, high-THC, high-hype strains. Growing high-quality, CBD-dominant cannabis plants has never been the most lucrative venture, but at least in the old days growers could afford to dedicate a plot of their garden to such a compassion project. Today, every inch of space needs to maximizing ROI and, thus, you get a real drought on the legal market for reliable CBD products. The ones that do make it to a store shelf usually come with a steep price tag attached.
Again, this is not a case of greedy manufacturers getting rich off of a plant that grows like a weed. It is the result of a “Tax & Regulate” system dressed up and sold as “Legalization”. It is the result of skyhigh licensing and permit fees, excessive state and local taxes, a crowded supply chain, and many other factors currently crippling Cali’s market. It is the result of the passage of Prop 64 in 2016 which essentially started a two year ticking timer counting down to the demise of medical marijuana in the state. With Prop 64 in place, it supersedes Prop 215 and subsequently SB 420, the two laws that formed the backbone of California’s wild west MMJ market for 20 years.
On January 9th of this year, all non-profit MMJ dispensaries operating loosely under the old SB 420 were to cease operations unless they had gained licensure from the state under the new law. What we are left with now is a decimated version of what once was. California residents with a valid medical condition can still visit a “doctor” to get a MMJ recommendation. The incentives to do so include:
- MMJ patients in CA are exempt from paying the state retail sales tax on all cannabis sales
- MMJ patients in CA are allowed to purchase and possess higher limits of cannabis flowers and concentrates – otherwise limited to 1oz of flower and 8oz of concentrates
- MMJ patients in CA have access to higher potency edibles
Not bad, but of course there are drawbacks as well. First and foremost is the added cost and hassle of making an appointment for the doctor evaluation, the added cost of a medical marijuana ID card (up to $100), and the still uncomfortable notion of putting your name on such a government-kept list regarding a federally illegal substance.
So, what about the stores? California does have a separate licensing category for retail stores that will only serve valid medical marijuana patients – but what incentive does anyone have to open such a store, especially when you see the growing disparity in sales between the two markets in Colorado? Apparently, not much. A search at the online portal for the California Bureau of Cannabis Control – the regulatory agency tasked with licensing retail dispensaries – shows that there are currently 585 retail sales licenses active. Of those, just 47 of them are designated as “Medicinal” only. When you dive just a bit deeper, their “incentive” becomes obvious. In the vast, vast majority of these examples, it is plainly clear that they chose to apply for “Medicinal” status purely to appease some crotchety conservative local decision-makers. When you find a licensee on the BCC list designated as “Medicinal”, just check to see what city or town they are located in. Then search again with that city of town filtered and nearly every time you will find that the city or town in question has zero rec shops.
So there are only 47 “Medicinal” dispensaries in the entire state and only about 1/3rd of the municipalities in the state even allow commercial cannabis activity at all. This has created what industry watchdogs refer to as “pot deserts” – vast areas of the state, mostly inland from the coast, that have zero access to “legal weed”, forcing residents from those regions to travel long distances. But those distances are even greater for patients seeking specific cannabis products at prices they can afford. Prices continue to climb for patients in need in California but the rights and protections that this new industry was built upon keep being eroded away.
THE QUICKEST FIX
The fastest and easiest way to fix this problem in California would be to create a wholly separate set of regulations for medical marijuana that would trim all of the fat out of the supply chain in the current rec market and would allow for caregivers and cultivators to sell their product directly to qualified patients. Dispensaries licensed in this manner should be able to grow and process their own product, on-site if they wish, and pass the savings directly to the consumers. Fresh cannabis farmer’s markets? Fuck yeah! Will this happen? Fuck no! Despite having tens of millions more residents than Colorado, California has yet to even come close to witnessing a billion dollars in total revenues, let alone raising a billion for the state itself. So there is no way that they will forfeit even the pocket-change revenue from this small sliver of the overall cannabis consuming population.
The migration of the masses to the rec market is inevitable in California, just as it has been in Colorado. The state’s show of force so far this year in cracking down on unlicensed operators will continue to level the playing field with the black market and the state should see revenues begin to rise. Just like in Colorado, the suits in Sacramento will not even notice the dying cries from the medical market.
On the Federal level, the government has already given us a glimpse of the future of medical marijuana. They give it names like Sativex, or Epidiolex. So many people are excited to see cannabis “legalized” nationwide here in the U.S. but if you think that the states know how to screw up a naturally good thing like weed, just wait until Uncle Sam gets his hands on it. Epidiolex, referenced above, is a cannabis-based CBD isolate in tincture form and is the only product of its kind approved for sale on the mainstream U.S. medical market by both the DEA and the FDA. It is intended for patients, typically children, who suffer from rare and otherwise untreatable forms of epilepsy. Besides having a bit of a shoddy track record of results so far, the product will cost a family well over $30,000/year to obtain it for their kid. This is a product that countless cannabis enthusiasts could recreate in their kitchens or garages for a fraction of the price but that will no longer be an option once the cat is out of the bag.
In the meantime, if you are a medical marijuana patient in California or any other state that allows for it, plant a seed and start growing your own cannabis. Ultimately, it will be up to us to keep the term “medical” in “medical marijuana”.