Some states have launched successful medical cannabis programs. They were able to attract cultivators, processors, and license dispensaries to serve patients out of the gate. Once patients were registered in the program, the expectation was that there would be a medical dispensary near them to purchase cannabis.
While many states successfully balance supply and demand with careful planning, other states have struggled with problems. Despite studies to evaluate the potential market for medical cannabis, some states were caught off guard in the first 1-2 years. Illinois is one example of a state where producers could not keep up with demand. And patients were left without access to medicinal marijuana.
In the state of Arkansas, the same problem occurred. The number of patients that enrolled in the statewide medical cannabis program was greater than officials anticipated. Community bylaws and pushback regarding zoning for dispensaries slowed down the process. And Arkansas inevitably ended up making a deal with Oklahoma. That patients from Arkansas could get a thirty-day medical card from Oklahoma and purchase cannabis there.
The problem with that arrangement (although it solved access issues for patients) is that it is illegal. Crossing a state border with any controlled substance is a felony offense. Neither Arkansas nor Oklahoma addressed that. Unofficially, it became a ‘don’t ask, don’t tell’ interim policy until Arkansas could solve the supply and demand issue. And registered patients with a medical card in Utah are now facing a similar problem.
Cannabis Sales Are Lower in Utah Than Other States
During the first year of the pandemic, both medical and adult-use cannabis sales in legalized states went through the roof. Some states hit unprecedented monthly sales records, and month on month, consumer demand didn’t back down. Many states saw marijuana sales escalate as the year progressed.
The numbers are not yet in for all sales of medical and adult-use cannabis for 2020. However, the 2019 figures show which states have successfully managed to grow cannabis revenues.
- California: $3.1 billion
- Colorado: $1.6 billion ($1.3 billion recreational, $0.3 billion medical)
- Washington: $1.1 billion
- Florida: $1 billion
- Michigan: $1 billion
- Nevada: $770 million ($700 million recreational, $70 million medical)
- Oregon: $752 million ($707 million recreational, $45 million medical)
- Arizona: $705 million
- Massachusetts: $484 million ($250 million recreational, $234 million medical)
- Pennsylvania: $298 million
Source Web 2021: The Motley Fool (Finance)
States like California, Colorado, and Washington were early adopters for legalized medical cannabis. The revenues reflect not only consumer demand but also the result of a well-planned medical and adult-use marketplace. And balanced production of cannabis to meet growing demand.
The Utah medical cannabis program was launched on March 2nd, 2020. In the first six months, cannabis revenues hit $8 million. After August of 2020, monthly sales of medical cannabis in Utah averaged just over $2 million. And analysts have estimated that the Utah marijuana marketplace may see up to $25 million in annual revenues. A drop in the bucket compared to other states.
Lackluster Cannabis Crops in Utah to Blame for Shortages
An audit was performed by the Utah Department of Agriculture and Food (UDAF), led by former cannabis commissioner Kerry Gibson in 2020. Six officials were appointed to a committee that scrupulously chose the first eight licensed cultivators in the state.
The audit was requested because the licensed producers were not performing. Out of the eight licensed cultivators, only four businesses were producing to scale. And to their agreed contract with the state of Utah.
A little drama unfolded. The UDAF found significant problems with the method that cannabis cultivation licenses were awarded. It was a statistical analysis used or a point scoring system. It’s not clear what happened, but it appears that two committee members may have nudged scores for specific applicants, which may have allowed some cultivators who did not meet the minimum criteria to be licensed.
The two committee members Natalie Callahan and Kelly Pehrson, will be part of an investigation by the Utah Attorney General’s Office. And now, the state of Utah is looking at significant changes to the way that licensees are evaluated. With 50% of cultivators not meeting production requirements, it has significantly hindered the successful launch of the Utah MMJ program.
Source Web 2021: Cannabis Dispensary
The trickle of cannabis that was cultivated in Utah for the inaugural year frustrated patients. It also frustrated dispensaries and regulators in the state. As demand grew and supply dwindled, it not only made medical marijuana hard to find for patients, it made it more expensive too. The production shortage was blamed for sending cannabis prices sky-high for patients.
Getting a Medical Card is Harder Than it Needs to be in Utah.
There is a significant shortage of cannabis available for Utah patients. That’s a big problem. But the second problem the state is facing is strict limitations to the maximum number of dispensaries that can be licensed in the state.
By September 2020, more than 10,000 patients in Utah had been issued their medical card. Out of 3,205,958 residents. A small turnout and slow adoption rate per capita, compared to other states. But Utah is also culturally conservative. Some physicians are not comfortable recommending medical cannabis for patients.
Getting a medical card in Utah is more complicated compared to other states. Patients have to have a medical evaluation. If they meet the qualifications, they are issued a medical patient status for 90-days. The patient is then required to return to the physician for a follow-up for a “90-day renewal”. And then, the prescription for medical cannabis is renewed for six months.
After six months, a medical cardholder is required to return to the physician again (this time, they can opt for telemedicine). The patient will undergo another interview and evaluation by the doctor, and if no issues are found, they renew their permit for another six months.
This procedure is arduous. And it is also expensive. Most states provide a one-year permit for patients who become registered in the medical cannabis program. Because of annual renewals’ administrative costs, some states consider extending the medical card validation for twenty-four months or two years.
Not Enough Dispensaries in Utah Led to Relying on Colorado for Medical Cannabis
Having excessive demand is a good problem to have! Until you have it. With cultivators underperforming, and medical cannabis patients enrolling at higher numbers, it was the perfect storm. Try explaining to patients that their card is valid, but dispensaries have no weed to sell them? As you can imagine, that went over well.
Currently, the legislation in Utah limits the state to a maximum of fourteen (14) licensed dispensaries. That would be one dispensary for every 228,997 people. Sure, not every resident of Utah is eligible for medical cannabis. And 100% of the population will not be getting a medical card. By comparison, Colorado has 20 dispensaries per 100,000 people. Of course, Colorado is just a 500 mile trip by car from Salt Lake City, Utah.
Two pharmacies are planned for Cedar City and St. George, Utah, but neither of them has opened as of January 2021. Five other cannabis dispensaries (called pharmacies in UT) still have not opened. Even though they were granted licenses in January 2020. If the dispensary locations do not open by April 15, 2021, they risk revoking their license.
Crossing State Borders with Cannabis Still a Felony Offense
There is not enough medical cannabis right now in Utah to supply patients. There are not enough dispensaries to serve the 10,000+ cardholders already registered in the state. Medical marijuana is also really expensive in Utah. It is a perfect storm of conditions that have led to a serious problem (and risk for patients); cross border shopping.
To solve the problem, patients in Utah have been traveling to Colorado dispensaries. Not only is there a greater selection of strains, but the prices in Colorado are far more affordable. The culmination of “failure to launch” events with the marijuana program in Utah have created an increased Black Market and cross border shipping problem.
Utah is passing a new set of laws to refine the medical cannabis legislation. And one of the statutes reiterates that purchasing and transporting cannabis from another state like Colorado is a felony offense. Again, like the example of Arkansas and Oklahoma, there may have been a “look the other way” unofficial policy before.
But as Utah fixes the problems and ramps up production, it wants to make sure that cannabis sales are reinvested in the state. Not benefiting the tax revenues of neighboring states. However, fixing this problem could be relatively easy for regulators in Utah. Produce more medical cannabis. Open more dispensaries and keep medical marijuana affordable for patients.
