By ACM Staff
How do you burn the black market? Beat ‘em at their own game.
The long battle between the underground economy and Arizona’s legal medical marijuana industry may be taking a decisive turn. In Dec. the Arizona Department of Health Services reported that 2018 set Arizona MMJ sales records on fire, burning through over sixty tons of the sticky icky during the twelve-month period. That’s equivalent of more than 120,000 lbs., or for those of you buying retail, it’s nearly fifty-four million grams of green.
AZ’s surging program showed improvements across the board. For example, the state MMJ sales tax revenues on last year’s estimated $400 million sales added approximately $22.4 million in state coffers. Meanwhile, the number of patients grew 22 percent. A program that started with only about 40,000 patients in 2012 now has more than 186,000 enrolled in the program. While that number is impressive, even more interestingly, at the same time the state’s legal cannabis consumption increased 41%, nearly double the patient rate. Various experts have tried to find explanations. Among the top possibilities:
Most market watchers suspect a significant portion of the jump is due to the increased market share of edibles and concentrates. Jones Case be damned, products made from concentrated marijuana extracts now account for 40% of the state market and require as much as seven grams of flower for every gram of concentrate produced. With sales for edibles and concentrates up 55 percent between 2017 and 2018, their impact on overall flower consumption has been an undeniable factor.
Will Humble, the state health director who launched Arizona MMJ program, also believes the increased number of cardholders shows increased customer satisfaction. When the program originally launched, it was widely speculated that as few as 30% of patients were actually shopping in stores. “It might not be that the heavy users are using even more,” Dr. Humble explained, “but that more of the people with cards who weren’t even going to dispensaries are now going because it’s more convenient or they like the product or the edibles are more desirable than what they were getting from their dealer.”
Kevin DeMenna, former lobbyist for the Arizona Dispensaries Association, appears to agree with Humble’s assessment. “Two-hundred thousand patients at $300 [to visit a doctor and pay the state fee] to be able to access this product legally, that tells you a great deal. That is a high financial threshold, and it takes time to get this medical certification.”
Plummeting retail prices are widely accepted as a factor as well in driving up total cannabis sales. In 2012 when dispensaries first opened one retail ounce of flower would typically cost $400.00. By Dec. of 2018, Desert Rose Dispensary had weekend specials as low as $65 an ounce out the door. As Jack Wilborn of LEAP noted, “When marijuana is cheaper to buy from the guy inside the store than from the guy behind it, expect the majority of cannabis consumers to go legal. It’s easier, safer and usually better quality.”
It’s worth noting that falling prices haven’t dismissed industry revenues, however. The Rounds Consulting Group of Tempe estimates sales in Arizona’s medical-marijuana industry will continue to grow at least 10 percent annually through 2027.
