Will Recreational Marijuana Cannibalize Medical Dispensaries?

Will Recreational Marijuana Cannibalize Medical Dispensaries?

The introduction of legalized recreational marijuana in Oregon was met with much celebration. However, two years since recreational sales began, one group may not be as excited as the rest of the state’s cannabis fans: owners of medical dispensaries.

How many medical dispensaries have closed?

As reported by Marijuana Business Daily, more than 200 medical dispensaries have either phased into the recreational space or closed completely since the beginning of 2017 when the state untethered the recreational market from the medical.

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To meet the new Oregon state rules that went into effect as the calendar flipped to 2017, if they wanted to serve recreational cannabis consumers, medical dispensaries were required to obtain an additional recreational license. If they did not, the medical businesses could only sell their cannabis products to clients holding a state-issued medical marijuana card.

Fewer medical cards, less medical business

That’s where things have gotten dicey for medical dispensaries. The Oregon medical cards are only good for a single year at a time, and since late-2015 the number of card holders in Oregon has shrunk from 74,531 to 61,659 by March 2017 (possibly due to the ease of accessing high-quality cannabis products without a card).

New medical card figures will be released in July, but even if they hold steady there is another reason medical dispensaries may be opting to join the recreational market. It’s the number 440,000: the estimated tally of in-state recreational consumers.

Some quick calculator-punching shows that, based on those numbers, there are some 378,000 more recreational consumers in Oregon than medical. The allure of grabbing a piece of that market share has proved to much for some former and soon-to-be-former medical dispensary owners.

Is there a silver lining for medical dispensaries?

But Eli McVey of Marijuana Business Daily suggests that could be a benefit to those choosing to stay in the medical realm. He writes that “as long as patient counts don’t fall to unsustainable levels,” the “rec market is quickly becoming saturated,” which means “a dispensary could find more success catering to a much smaller customer base given the relative lack of competition.”

So there is a possible silver lining to all this for medical dispensaries.

That said, what-ifs abound in the Oregon medical marijuana market, and it will likely be another year or so until we have a clearer idea of how these two separate but complementary markets impact one another.