Crossing State Lines to Buy Much Cheaper Weed? You Bet, 90% of Virginia MMJ Patients Get Their Cannabis from Other Sources

December 5, 2023 · cannabis-net

It’s not uncommon for residents of states yet to enact cannabis laws to travel and obtain their weed through out-of-state dispensaries. However, one Southern state appears to be experiencing this issue when it comes to medical cannabis, even though it’s had legal, operational medical dispensaries since 2020.

A new 78-page report released by the Virginia Cannabis Control Authority (CCA) takes a closer look at the state’s medical cannabis market, most notably finding that the state’s high prices are driving consumers to border states to purchase their cannabis products.

The report results from a request on behalf of the CCA from earlier in 2023 to study Virginia’s medical cannabis program, focusing on patient access and “determining the necessity and feasibility of adding new licenses to the existing program.” The study involved a population survey of past-year cannabis consumers and patients, an assessment of supply based on patient experiences and a policy analysis.

High Prices Drive Virginians to Seek Alternative Cannabis Sources

The comprehensive study conducted by the Virginia Cannabis Control Authority (CCA) sheds light on a growing trend in the state’s medical cannabis landscape. Despite the presence of legal and operational medical dispensaries since 2020, Virginia is grappling with a notable issue – soaring prices that are compelling consumers to explore alternative avenues in neighboring states.

The report underscores the impact of evolving adult-use policies in local and nearby states, contributing to the persistence of high cannabis prices within Virginia. A striking revelation from the study is that 12% of medical cannabis patients admit to crossing state borders, specifically to Washington, D.C., and Maryland, in pursuit of more affordable and accessible cannabis products.

Examining the financial aspect, the findings reveal a stark contrast in expenditure between medical and non-medical cannabis patients in Virginia. Medical cannabis patients reportedly spend an average of $19 per gram on cannabis flower, surpassing the national average for medical cannabis. However, publicly available data suggests that the average price of a medical gram in Virginia hovers around $14, still exceeding the national average.

Comparisons with neighboring jurisdictions provide further context. As of September 2023, the average price per medical gram in D.C. stood at $8.73, while Maryland’s adult-use cannabis averaged $9.27 per gram. This glaring price differential raises concerns about the economic impact on Virginia’s medical cannabis market and the choices patients are making to meet their cannabis needs.

Delving deeper into the consumer landscape, the report unveils that a significant 90% of medical cannabis patients in Virginia are resorting to sources outside the state’s regulated medical market. Many are turning to an “unregulated, but not necessarily illicit, market,” emphasising the challenges in meeting demand within the current framework. Additionally, a substantial portion of patients, 57%, are engaging in home cultivation, while 65.2% are obtaining cannabis from friends or family. This multifaceted scenario highlights the complex dynamics driving Virginians to seek alternative cannabis sources amid high prices and evolving regulatory landscapes.

Unravelling the Challenges of Virginia’s Medical Cannabis Program

While Virginia boasts low barriers to patient participation in its medical cannabis program, a puzzling conundrum persists — only a mere 0.5% of the total state population is estimated to be enrolled. This striking statistic raises questions about the accessibility and attractiveness of the state’s medical cannabis initiative despite its apparent ease of entry.

The report delves into the attitudes of consumers from the past year, who constitute a substantial 22% of the surveyed population despite not being enrolled as medical patients. Surprisingly, this group expresses a lack of inclination to become medical patients, citing ready access to cannabis as their primary reason.

Examining the root causes, the report attributes this low enrollment paradox to Virginia’s intricate policy framework, characterized by limited licensing and Health Service Area (HSA) segmentation. These factors, coupled with the widespread availability of cannabis from out-of-state markets, home cultivation, and illicit channels, create an environment where pharmaceutical processors operate within the confines of a supply-demand equilibrium optimized for profit.

In simpler terms, the report posits that the existing policy landscape and alternative cannabis sources have created a scenario where licensees may not foresee increased profits by expanding their supply and reducing prices. This perception is further underscored by the emergence of substitute markets that have gained prominence in recent times.

In essence, the low enrollment in Virginia’s medical cannabis program, despite its seemingly accessible nature, is a complex interplay of policy intricacies, alternative sourcing avenues, and the perceived lack of economic incentives for stakeholders to expand their operations. Unravelling these challenges is crucial for understanding the dynamics that have led to a disparity between accessibility and actual participation in the state’s medical cannabis initiative.

Strategic Solutions for Virginia’s Medical Cannabis Sustainability

Acknowledging the challenges outlined in the report, the focus shifts to potential solutions to sustain Virginia’s medical cannabis program. The authors propose a nuanced approach, recognizing that the elevated prices, while likely a necessity for pharmaceutical processors’ viability, need addressing to ensure patient access and program sustainability.

The report outlines five potential strategies designed to enhance patient access, stimulate supply, and steer patient demand towards regulated pharmaceutical processors. One proposed solution involves the issuance of remaining Pharmaceutical Processor licenses within Health Service Areas (HSAs), a move that could foster increased competition and potentially lower prices. This strategic allocation aims to address the existing disparities in availability and pricing within the state.

Another proposed pathway suggests the addition of limited standalone licenses for medical cultivation, manufacturing, and dispensary operations within an HSA. This diversification could contribute to a more robust and accessible medical cannabis market, providing patients with additional options and potentially mitigating the current challenges associated with limited licensing. Additionally, the report advocates permitting pharmaceutical processors to expand beyond the existing minimum of six stores within their designated area, offering an avenue for increased supply and potential price adjustments.

Bottom Line

The report highlights Virginia’s medicinal cannabis program’s complex difficulties, ranging from increasing pricing leading patients to out-of-state alternatives to a baffling 0.5% enrollment rate despite low participation hurdles. Strategic solutions are required to sustain the initiative. The proposed measures, which include issuing remaining licenses, diversifying operations, and expanding Pharmaceutical Processors, provide a sophisticated approach to addressing pricing problems, encouraging market competition, and improving patient access. As Virginia works to close the gap between program accessibility and actual participation, these ideas provide a complete path for leading the medical cannabis program toward sustainability and fulfilling the changing requirements of patients in the state. (Full Story)

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