By Becky Olson
To develop reasonable financial projections and expectations, dispensary owners need – among other things – an estimate of the average quantity their patients will purchase each year.
The average quantity of cannabis flower patients in select states bought from dispensaries last year ranged from as few as 3.4 ounces per patient in Rhode Island to as many as 15.5 ounces per patient in Colorado, according to state reports – a huge range that can have a material impact on dispensary revenue.
Why such large disparities? It is largely a matter of accessibility.
Patient access to cannabis can be physically restricted, as is the case in Rhode Island and New Jersey, where there are only 3 operating dispensaries in each state. A sizable portion of the patients there are not within what most people would consider to be a convenient distance of a retail location. That physical access burden can be alleviated with delivery services, where permitted. Rhode Island allows dispensaries to deliver directly to patient homes, however, New Jersey does not.
In contrast to these smaller Northeastern states, Arizona and Colorado have many more dispensaries per patient that are also more geographically distributed. Arizona officials estimate that over 95% of the state’s patients are within 25 miles of a dispensary, and based on the fact that average annual consumption there last year was just over 6 ounces, it appears patients have more access there than their East coast counterparts, and are consuming larger quantities.
And while dispensaries in Colorado are not quite as evenly distributed across the state due to local bans, the state’s decision to not cap the number of licensed dispensaries (unlike in Arizona) has resulted in a tremendous proliferation of them, particularly in the state’s more dense urban centers.
“Here in Colorado, there’s a dispensary on every corner. Take a ride down Federal or Broadway and you’ll see a ton of them,” says Denver-based Adherence Compliance CEO, Steve Owens.
Aside from physical restrictions, patient access to MMJ can also be affected in other ways, including the state’s approved list of qualifying conditions and the degree of physician cooperation in recommending cannabis to patients in the first place.
“Here [in Colorado], it’s really, really easy to get a [MMJ] card,” Owens said. Though both Colorado and Arizona permit MMJ to be recommended for severe pain – and Arizona additionally allows chronic pain – the degree to which physicians are willing to stretch the definitions of such conditions can and does vary significantly as well.
Further complicating the picture: home cultivation rules. States that prohibit home growing naturally funnel more purchases through dispensaries. This is likely a contributing factor to the sales numbers in New Jersey, where home grows are not allowed. The average quantity per patient there in 2014 according to data from the health department was 4.1 ounces – 21% more than the average quantity patients in nearby Rhode Island purchased, where home growing is permitted.
Need another curveball on these figures? Patients in New Jersey are required to register with a single dispensary, so they cannot get around annual possession limits by simply driving to another one to make another purchase.
As the range of figures here shows, and because the data necessary to make these calculations isn’t tracked by every state with MMJ laws, entrepreneurs eyeing new markets need to be particularly mindful of factors that affect general accessibility and convenience for a state’s patients when developing estimates for how much MMJ the business will actually sell each year.
Becky Olson can be reached at [email protected]