The decline in medical marijuana: As the rest of the nation goes medically green, Colorado’s dispensaries are taking a turn toward recreational cannabis
There are no medical marijuana dispensaries in Pagosa Springs, a town that has four recreational dispensaries. The last option shuttered its medical side of the dispensary earlier this year, leaving medical patients in Pagosa, about 60 miles from Durango, with two choices: they can buy products from the recreational side of a dispensary or they can travel to a place that can accommodate their needs.
But it’s not just Pagosa Springs that’s taking a medical dispensary hit. The trend is widespread across Colorado. Earlier this year, Durango’s last-standing medical-only cannabis dispensary, MHS, quietly closed its doors after nine years in business. The dispensary was an early pioneer of legal marijuana in La Plata County and helped pave the way for a new climate of recreational dispensaries.
And then, in early fall, Sante quietly shuttered its medical marijuana side, leaving just two dispensaries in Durango – Durango Organics and Prohibition Herb – to serve the area’s medical marijuana patients.
“It’s a really big challenge looking forward on a bigger scale. Not only are we losing licenses in southwest Colorado, but across the state,” Wes Drobney, owner of Prohibition Herb, said.
The dwindling number of medical marijuana dispensaries can be a challenge for the patients Colorado once served, many of whom face trouble with mobility or transportation.
One of the issues is that the rules and regulations – and with them, the cost of licensing and business – haven’t evolved at the rapid pace of the industry itself. Running a medical dispensary, or a dispensary with both recreational and medical sides, isn’t exactly cost effective. The licensing in La Plata County runs $8,000 per license, and you have to have separate ones for medical and recreational. Running a small business of any kind can be cost prohibitive, and throw in the exorbitant licensing fees and laborious regulations that come with running a marijuana dispensary, and it can mean the choice between one license or the other for many owners.
There are also other restrictions, like the regulations that require medical dispensaries to grown their own cannabis to ensure there are no banned pesticides or other harmful substances used in the grow process. Rec retailers, on the other hand, can buy all of the flower to stock their shelves from wholesalers, which cuts out the cost of the grow operation from the equation. Medical dispensaries, on the other hand, cannot utilize wholesalers. That means to open a medical dispensary, it requires more employees, more licenses, and more money.
An article published by Motley Fool in January 2018 asks the question, “Is the game over for medical marijuana in Colorado?” while pointing out that medical marijuana sales across the state slumped in 2017. In the data dump for Colorado’s 2017 marijuana sales, the state notes that medical marijuana sales were at $420 million in 2017, down from about $430 million in 2016. That $10 million drop may seem paltry, but it was the first time the demand for medical marijuana had dropped since 2014, when the recreational market opened for business. Recreational sales, on the other hand, grew by 30 percent in 2017 and amounted to about $1.07 billion in business. Motley Fool points out that the limited qualifying conditions and the difficulty obtaining a medical marijuana license for patients is compounding the issue.
And, if you look at the data, it is. Medical marijuana licenses for patients dropped to 89,220 in October 2018, down from 102,914 patients in October 2016. And, it’s not just red tape hurdles that keep potential medical marijuana patients from getting licensed to buy their medicine on the medical side of a dispensary. It’s the high cost of the process, too. Simply visiting a medical marijuana doctor in Durango can run about $120, and that’s not including the state license fees, so the cost for applying can be prohibitive.
“The going to the doctor every year system, that whole thing, it’s not super straightforward, but it’s more straightforward than it’s ever has been. But when you look at those hurdles, it’s like one hundred and twenty bucks for the doctor and then it’s another twenty six bucks to the state, and you know people just don’t want to cough that up right off the bat, even though they would be saving money on the medical side,” Drobney said.
But even with those challenges, and even with the dwindling number of medical dispensaries, Durango is lucky. There are dispensary owners like Drobney who feel compelled to keep their medical sides up and running. It’s important enough to pay the fees and jump through the extra hoops. It costs Drobney an extra $8,000 a year to license the medical marijuana side of his dispensary, which is partitioned by a wall from the rec side. It’s a requirement if the dispensary wants to serve younger medical customers, many of whom, whether it’s for a serious seizure disorder or otherwise, need cannabis to not only cope, but survive. That’s $16,000 in just licensing each year, a cost that could be cut in half if he chose to go only rec.
It’s easy to write off the loss of medical marijuana dispensaries in Colorado as a simple pitfall of a changing industry, but it’s not that simple. The medical marijuana pioneers were the ones who paved the way for the recreational industry in Colorado, and without medical marijuana, there would be no legal rec. The products recreational customers buy for pleasure were at one point developed for patients with pain.
“At one point, CBD was only on the medical side, and you wouldn’t see CBD products on the recreational side,” said Sayra Sims, manager of Prohibition Herb. “And as time has gone on, companies expanded (from medical edibles) to recreational edibles, and those companies are kind of expanding into that. People are asking for it, and they’re still using cannabis medicinally, they’re just buying it on rec.”
It’s an interesting dichotomy, the winding down of medical marijuana in the state that pioneered it, and at a time when the rest of the country is only just beginning to legalize medicinal cannabis. Conservative states like Utah and Missouri just legalized limited types of medical cannabis during the November elections, and Oklahoma legalized medical marijuana earlier this year, making the count 33 states and D.C. that have some access to legal cannabis. But, as medical dispensaries are beginning to pop up in those states, a first for those areas, the doors are closing at many medical dispensaries here.
“We’re definitely starting to see the scales tip, you know. It’s not just like a couple of states on the map. There are fully green states,” Sims said. “It’s nice to see that progress.”
Medical marijuana is, after all, how Prohibition Herb started. But no good deed goes unpunished, and even if Prohibition is devoted to keeping the medical marijuana side running, that doesn’t mean keeping it open – and stocked – is simple. Not by any means.
As the industry turns more and more toward recreational cannabis, so do the companies that supply products like edibles and topicals – the products dispensaries aren’t exactly able to “grow” on their own. Keeping cannabis flower in stock is the easy part. Finding a steady supply of medical gummies is more taxing.
“Keeping some of the products – that’s the challenge,” Sims said. “We just heard something (from Wana) where they’re discontinuing like their 200 milligram hybrid gummies...they’ve been in this game for a long time and they’re scaling back their selection. Blue Kudu pared down their offering...we’ve seen Sweet Grass cut back a little bit too. So, you know, they’re not gone, but they just don’t offer as many options.”
And, as the old school distributors cut back, the newer companies are often eschewing medical products entirely. They are, as with the old school marijuana pioneers, pivoting toward a focus on the recreational supply instead.
“We just went through a little product sourcing with the inventory team to find more products we can get on medical, and it’s super challenging to find stuff that we don’t already have a version of,” Sims said.
It’s not that the marijuana industry as a whole is taking a hit, though. It’s thriving, growing by leaps and bounds year after year, but the money and research isn’t going into medical products.
“The industry is thriving. There’s more money and more science for more recreational (products),” Drobney said.
Between the licensing hurdles and the dwindling product options, it often prompts the traditional medical cannabis users to eschew renewing their licenses in lieu of buying products on the recreational side instead.
“People are asking for it (medical products). They’re still using cannabis medicinally, they’re just buying it on rec,” Sims said.
There are caveats, though. Sure, Wana gummies are available for rec customers, and medical customers can certainly take part in purchasing them, but the milligrams – and ultimately the pricing – aren’t comparable.
A 100 milligram container on the rec side, which is the standard on rec edibles, typically runs about $25 for 10 gummies containing 10 milligrams of THC each.
On the other hand, medical patients can purchase products containing 200 or 300 milligrams of THC on the medical side of a dispensary, with considerably more milligrams per gummy, for the same price. That triples the cost for medical patients who need a higher amount of THC for relief if they purchase on the rec side.
Patients can also carry and buy more flower with a medical license, so shopping on the rec side, while convenient, limits the amount of medicine they can legally buy each day. While that may seem like a minute issue, for medical patients with limited ability to make it to the dispensary, it can mean running out of medicine before they can make it back to get more.
It’s for these reasons that Dobney wants to continue to serve medical patients in Durango, even if the statewide trend is to shed medical in lieu of the simple licensing and larger profits of recreational cannabis.
“There’s less medical marijuana (in the area), so it’s really balanced out between us. It’s a pretty sustainable model right now,” Drobney said.
But, even if the medical marijuana business weren’t quite as sustainable, Drobney said they’re in it for the long haul anyway.
“We always have been and always will be.”