+ 4.55
+ 1.46%
+ 1.24
+ 0.4%
+ 2.97
+ 0.79%
+ 0.49
+ 0.32%
+ 1.37
+ 0.8%

Short Of Federal Reform, Medical Cannabis Patients And Investors Need To Think Long To Remain Healthy In Patchwork Markets

July 29, 2019 4:53 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
Short Of Federal Reform, Medical Cannabis Patients And Investors Need To Think Long To Remain Healthy In Patchwork Markets

By J.J. McCoy, Senior Managing Editor, New Frontier Data

Medical cannabis patients tend to have enough concerns as it is, before any aggravation about the peculiarities of their particular state programs. Yet, it is an unavoidable condition for most patients and investors that they keep current with the patchwork of state policies and politics which characterize today's markets pending federal reform.

After review earlier this month of how state medical cannabis markets vary in their saturation levels, analysis of data collected across legalized medical-cannabis markets nationwide shows that numbers of participating patients drop significantly wherever adult-use products are legalized for purchase (even among neighbors). The dynamic holds despite varying levels of saturation rates depending on time (e.g., longer-established programs in Colorado and Oregon saw patient saturation rates reach about 2x that of newer, shorter-operated programs in Massachusetts, Nevada, and Vermont).

Divergence in programs lead to different outcomes state to state, but since a decline in a medical market occurs whenever an adult-use market opens, it is incumbent upon license-holders (whether of prescriptions cards or business licenses) to understand the political dynamics and trends within their respective states regarding any potential or pending adoption of full-use programs.

How will a recreational market affect medical-use participants? What amount of supply capacity will be required to efficiently fulfill demand? Since success amid either and both medical and adult-use markets depends on the conditions to participate or adapt – while still discouraging consumers from dropping out of legal markets and programs to save time and effort in the illicit market – there is a premium on flexibility: Modularity in approach is required for agility amid uncertainty.

That holds true for operators as well as regulators. In one business-case example, a cultivations operator was looking to build a $20 million facility before a board member presciently asked for clarity about what position they might find themselves in a few years later, once its state's full-use program was to be activated. Upon further review, the investment call was overturned.

As illustrated in Michigan this month, each state has developed unique regulatory structures for medical and adult-use sales, with various ranges of incentives for registered medical cannabis patients to remain in its programs. Such differences include (but are not limited to) taxes affecting point-of-sale prices, costs of medical card renewals and doctor's visits, availability of products across markets, and possession and purchase limits for patients and adult consumers.

Michigan officials have devised a new license type for large-scale cultivators to operate in both the medical and adult-use markets, by allowing the growers to have more plants than previously capped under state law. The state will also allow both medical and adult-use products to be sold in the same retail stores, provided that the products are distinctly separated. Likewise, should the state's Marijuana Regulatory Agency deem conditions necessary, it has authority to temporarily allow for transfer of medical cannabis to the recreational market.

Conversely in some other states, though medical marijuana products often provide a higher THC potency, the prevalence and product choices of adult-use retailers offer some tempting incentives to avoid registering as a patient and instead shop directly to self-medicate. For their part, Illinois regulators have made provisions for dispensaries in that state's forthcoming adult-use program to prioritize medical patients in case of any cannabis supply shortage after recreational sales begin on January 1, 2020.

The post Short of Federal Reform, Medical Cannabis Patients and Investors Need to Think Long to Remain Healthy in Patchworked Markets appeared first on New Frontier Data.

Image sourced from Pixabay

Related Articles

Cannabis Stock Gainers And Losers From January 19, 2021

GAINERS: High Tide (OTCQB: HITIF) shares closed up 42.4% at $0.30 read more

Arkansas Medical Weed Sales Reach $175M In 2020, Projected To Double In 2021

Arkansas welcomed medical marijuana sales back in May 2019, only to see substantial market growth last year, with sales hitting the $175 million mark, reports Marijuana Business Daily. There was a record $1.22 million day, per Marijuana Business Factbook estimates. read more

Cannabis Movers & Shakers: Vireo Health, Flora, MJardin, Arcview, Viridian Capital Advisors

Here is a summary of the latest leadership changes within the cannabis industry. read more

Juva Life Obtains California Cultivation License For Stockton Facility

Life sciences company Juva Life Inc. (CSE: JUVA) (OTCQX: JUVAF) has obtained a state-approved cannabis cultivation license for its 30,000 square-foot facility in Stockton, California. read more