East Valley medical marijuana dispensaries are enjoying a phenomenal growth rate in sales, despite the failure of Proposition 205, but they are also prepping for an inevitable period of price declines, market consolidation and increased competition.
We have already seen price declines and increased competition, said Steve White, CEO of Harvest of Tempe. Market consolidation is likely next.
Lilach Power, co-owner with Gina Berman of The Giving Tree Wellness Center in Mesa, agreed.
We have seen a number of licenses consolidating, she said. We have seen more dispensaries opening in Maricopa Countysome are new licenses, some have moved from other areas of Arizona. But overall its a market of small local operators.
The Giving Tree and Harvest comments come in reaction to a recent eye-opening report saying that medical cannabis sales in Arizonaon course to hit $367 million in 2016will top $681 million by 2020. The study was conducted by Washington, D.C.-based New Frontier Data, a big data cannabis analytics outfit, in partnership with publisher Arcview Market Research.
Almost any business would be thrilled to be in a market with a 17 percent compound annual growth rate, until you consider that they were a few thousand votes away from having a growth rate double that, said Troy Dayton, CEO of the Arcview Group.
Had Prop. 205 passed, which would have legalized adult recreational use of marijuana in Arizona, medical and retail marijuana sales likely would have approached $1.2 billion by 2020, noted New Frontier Data founder and CEO Giadha DeCarcer.
Now, they must begin planning for a period of steep price declines, license holder consolidation, and intense competition in the market, she said.
Harvests White said he wasnt all that alarmed by the study.
The report is encouraging and reflects the efficacy of cannabis as medicine, he said. But it is simply a predictionfun to talk about and usually wrong.
As far as price declines, said Power of The Giving Tree, I see it more as stabilizing. The fair market price of low-quality medicine versus high-quality medicine is becoming more standardized.
Power said her dispensary is working on a new greenhouse facility in not-so-hot Northern Arizona that will increase production. Partner Berman admitted that prices will drop further if Arizona growers start producing on a larger scale, but that hasnt happened yet.
For the near future, Power said, The Giving Tree will focus on providing high-qualityand consistentprescribed medicine for its patients.
It costs more but our patients appreciate it, she said. I think we are comparable to the brewery market. There are big ones, but many people turn to small breweries for quality local beer.
Power and White pointed out that the metrics of the Valleys marijuana market will shift again when Arizona voters approve recreational cannabis use in two or four years, which they are confident will happen.
In four years, when Arizonans see the sky hasnt fallen in all of the states that have legalized marijuana for recreational use, and that we are missing out on significant tax revenue, the result will be very different, White said.
I have no doubt it will pass when it comes around on the ballot again, Power said. I am confident that voters will be a lot less fearful of this plant the next time.
Arizona voters very narrowly approved medical marijuana in 2010. The first dispensary opened December 2012. Today, the Department of Health Services has licensed about 90 dispensaries, and more are on the way to accommodate perceived underserved areas.
DHS has issued about 100,000 qualified patient cards. To qualify for medical marijuana, patients must see a doctor yearly for a diagnosis of an approved medical condition, then apply online for a card, which costs $150 per year. Chronic pain is the overwhelming reason Arizonans turn to medical cannabis.
News Moderator: Katelyn Baker
Full Article: Sales Soar But Uncertainty Remains For Medical Marijuana
Author: Mike Butler
Contact: 480-898-6500
Photo Credit: Will Powers
Website: East Valley Tribune
