Medical marijuana

Prescription marijuana samples are displayed in the Giving Tree store in Mesa.

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 County—some are new licenses, some have moved from other areas of Arizona. But overall it’s 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 Arizona—on course to hit $367 million in 2016—will 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.

Harvest’s White said he wasn’t 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 prediction—fun 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 hasn’t happened yet.

For the near future, Power said, The Giving Tree will focus on providing high-quality—and consistent—prescribed 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 Valley’s 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 hasn’t 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.

– Reach Mike Butler at 480-898-5630 or at mbutler@timespublications.com.

– Comment on this article and like the East Valley Tribune on Facebook and follow EVTNow on Twitter.

(1) comment

4birds

i always thought the prices of medication at dispensaries was outrageously high, especially when you look at it from an angle of an actual patient who trys to use there medication in regular doses. my doctor for instance recommends i take 2000 mg of cbd per month to function as a nerve blocker for my pain with the goal being pain relief without mind alteration, well at the cheapest dispensary i know of a 1 gram concentrate containing 70% cbd (700mg) costs 65 plus tax witch would be about 200 a month. if i were to go to the closest dispensary rather than driving about 20 miles id be going to harvest of Tempe where they charge 90 per 250 mg of cbd or 720 plus tax monthly for the dose my doctor recommends as a MINIMUM. if we were talking about recreational marijuana i think it would be ok to look at it as a positive thing that prices very so much, but since we are talking about a medical program i think anyone who is proud of pricing medication by quality rather than by what a patient actually needs should be ashamed of themselves(on a side note why wouldn't something being used as a medicine always need to be top quality?). many of us are not connoisseurs looking to try the best of the best, we are just unfortunate people who are trying to live as normal a life as possible. more and more i've noticed how our system is not designed with the sick in mind, its perfect for an individual who wants to get off work and go buy some bud to smoke, but i just don't see how anyone who is using it medically can afford the amount they would need to actually live a higher quality of life. Just so you know it is completely viable to charge less and the price only ever got this high do to the associated risk of going to jail, but in a legal market in no way should you be able to justify profits of over 2000 dollars per plant, especially when the people you are taking advantage of are the disabled who often don't have much money to spare in the first place. The change that would actually help patients the most in my opinion would be changing the 25 mile law from no plant growth if you live within 25 miles of a dispensary to something like a 4 plant limit, this would also help patients get strains that are specifically for their conditions rather than picking from a selection just designed to get you stoned(like how cbd is what most patients need medically, yet over 90% of strains offered are thc focused with little to no cbd). thank you for taking the time to see things threw my prospective as a patient who wants a better system driven by the desire to improve peoples lives rather than the desire to make cash.

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