The Associated Press reported that the state’s medical marijuana program is in a “death spiral.” In 2015, an estimated ~5000 patients were registered to purchase cannabis from one of Ohio’s five licensed cultivators.
Nearly three years after Ohio’s first medical marijuana shop opened, slightly more than half of the state’s marijuana card holders believe the program is ineffective.
That’s according to a late September study from Ohio State University’s Moritz College of Law’s Drug Enforcement and Policy Center, which monitors the state’s medical cannabis program.
The organization sent out a poll to 1,402 patients and potential patients, and 1,326 replied, with one frequent complaint: medical marijuana is too costly.
“This program still needs a lot of improvement,” said Angelica Warren, a Westerville patient and activist.
Warren agreed that certain expenses had decreased, but said pricing for other manufactured goods have become “increasingly ridiculous.”
“I can get a gram of concentrate for $15 in other places, but Ohio has much nearly tripled that price,” Warren added.
Why is medical marijuana so costly in Ohio?
Prices for the medication have generally defied expectations that prices would become reasonable as the program developed, despite being lower than in January 2019 when Ohio’s first dispensary debuted.
Industry insiders, on the other hand, are bullish about plans to grant additional dispensary licenses and let growers to produce more cannabis.
“It will offer a lot more product, and it may drive costs down,” Tim Johnson, founder of the Hilliard-based Cannabis Safety First security and consulting firm, said.
Patients have heard that promise before, according to experts and patient activists.
“Prices have certainly gone cheaper when you compare the first few months of 2019 to today,” said Jana Hrdinova, the drug policy center’s administrative director. “However, prices have not changed in the past 18 to 24 months.”
She observed that during that period, more dispensaries opened and more growers produced cannabis. It’s unclear how long it will take for the most recent reforms to result in reduced dispensary pricing. According to Cameron McNamee, a spokesman for the Ohio Board of Pharmacy, which oversees dispensaries, the more dispensary license applicants, the longer it takes to approve them. And establishing a dispensary may take anything from a few months to many years.
“That being said, we are optimistic that our new drawing process, which does not depend on scoring each application but rather on a review of each application to verify it follows the rules,” McNamee said.
A gram of marijuana flower cost approximately $11 in June, the most recent month for which statistics were available. It was approximately $17 per gram when the state’s initiative started in earnest in 2019.
Manufacturing costs, such as tinctures, oils, and vaping equipment, are more difficult to estimate since prices vary significantly across brands and dispensaries give discounts to certain patient groups.
Ohio marijuana growers call high pricing a “fiction.”
Officials from the industry defend their pricing. Larry Pegram, the owner of Pure Ohio Wellness, a business with cultivation, processing, and dispensary licenses, claims that Ohio’s expenses are cheaper than those in neighboring states such as Pennsylvania, a claim backed up by the policy center’s research.
“Now that costs are higher in Ohio, it’s a bit of a myth,” he added. “Unfortunately, you have people whining about pricing who have been purchasing on the black market for years, and that price will be much cheaper than what we can accomplish.”
The drug policy center’s study has a lot to like for state authorities, who point to broad confidence in the safety of Ohio’s medical cannabis products.
“The publication also points out that medicinal marijuana costs in Ohio are considerably cheaper than in Pennsylvania, another medical-only state in the area,” a spokesman for the Ohio Commerce Department said in a statement.
Ohio divides producers into two categories, limiting the amount of space they may use to cultivate cannabis. The first has a canopy area of 25,000 square feet, while the second has a canopy area of just 3,000 square feet.
The two-tiered approach is designed to let smaller businesses with less resources get into the market.
“It took a lot more money to construct the facility, a lot more assets to obtain the license, and it was certainly a more competitive process to gain the license,” said Larry Pegram, owner of Pure Ohio Wellness, a 25,000-square-foot cultivation site near Springfield.
Cultivators, on the other hand, have long complained that the limitations hamstring their operations. After long negotiations between state authorities and business organizations, the ability to request additional square footage was granted.
Tom Hobson, CEO of FN Group Holdings, which runs Wellspring Fields, a 3,000-square-foot growing facility in Ravenna, northeast Ohio, stated, “We’ve been very hampered over the past two years.” “We can’t keep up with demand.”
Could efforts to expand Ohio marijuana production and dispensaries result in higher prices?
The Commerce Department announced last month an application procedure for growers to increase their square footage. Growers must satisfy a number of requirements, including demonstrating that they have utilized all of the area originally allocated to them. The state’s medicinal marijuana legislation, which was enacted in 2016, allows state authorities to relax limits on square footage when they deem it necessary.
Pure Ohio spent millions to establish itself in Ohio’s medicinal marijuana business, and increasing their growing area should allow them to recover part of that investment, according to Pegram.
“To generate money, we need to go to 50,000,” he added.
Some in the business are concerned that the move is too late. Following a decision to more than quadruple the number of dispensary licenses, the new application procedure was implemented. Ohio now has 58 approved dispensaries, with the Ohio Board of Pharmacy, which regulates them, accepting applications for another 73 in November.
Cultivators are having difficulty providing enough product for the processors and dispensaries that are already open, and increasing growing space while more than doubling the number of outlets puts Ohio “a little behind the eight ball on this,” according to Hobson.
According to Max Salinger, vice president of technical cultivation at Cresco Labs, which has a growing facility near Yellow Springs, the company intends to utilize every square foot of the 50,000 square feet it may apply for.
He said, “We’re looking at creating close to 140 positions.”
Although the business produces marijuana in other states, it is unable to move its goods over state borders due to federal drug laws.
When questioned about dispensary pricing, industry leaders prefer to mention simple economics. According to supply and demand principles, a larger supply of a commodity should lower pricing.
That seemed to be the case early on in the program, as dispensary expenses steadily decreased, but sticker prices reached a ceiling about 18 months ago, according to Hrdinova.
Regardless of cost, the expansion should provide patients with additional choices, according to industry experts.
“We’re hoping to be able to continue to launch new strains using our facility,” Salinger added.
Gummies, oils, tinctures, and vape pens are just a handful of the items offered in Ohio dispensaries, and Cresco wants to expand its own offerings, according to Salinger.
Patients often complain about not being able to locate the appropriate strains, according to Johnson, who has a medical marijuana license.
He believes that more growing area would help the issue. He did emphasize, however, that the goods presently offered at most dispensaries are diverse.
“Even though they have different strain names,” he added, two items “may have a very, very similar profile.”
Hrdinova pointed out that Ohio has tweaked the program in minor ways that patients like, such as permitting online ordering and curbside collection, during the last year and a half.
“While the price is usually the focus of media attention, don’t overlook the fact that the state has implemented adjustments that seem to be improving satisfaction,” she added.