Chart of the Week: Recreational marijuana pushing down MMJ patient counts

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By Eli McVey

The legalization of recreational marijuana can put a big dent in a state’s pre-existing medical cannabis market, according to a look at changes in the number of registered patients in Colorado and Oregon.

Patient numbers have fallen 8% in Colorado and 14% in Oregon since the first day of adult-use sales in each market, and it’s unclear where the bottom lies.

Both states could conceivably see further decreases as patients who use marijuana only occasionally continue to switch to the rec market.

The figures offer medical cannabis businesses an idea of what happens to the MMJ market in states that legalize recreational marijuana going forward.

Colorado and Oregon are the only states in the nation with both an active recreational marijuana industry and a pre-existing medical cannabis patient database.

Oregon began selling retail marijuana through existing medical dispensaries last October. By July of 2016, nine months later, patient counts in the state fell to 67,158 – a 14% decline and the lowest count since the program began keeping record.

By comparison, Colorado’s medical marijuana patient counts actually rose 6% in the nine months following recreational marijuana legalization. But patient counts have fallen somewhat precipitously since then.

Fortunately, revenue does not necessarily correlate with patient counts, as sales of MMJ in Colorado are actually up 8% through the first half of 2016 compared to the same period in 2014. Oregon does not release sales data for medical cannabis transactions, so it’s difficult to assess the full impact of recreational marijuana.

Multiple factors are contributing to the decrease in registered medical cannabis patients.

Both Colorado and Oregon require an annual written recommendation from a doctor, and the list of qualifying conditions between the two states is similar (both include chronic pain, the most prevalent condition treated with MMJ by a wide margin).

But in Oregon, the annual cost to register as a medical marijuana cardholder is $200. In Colorado, medical marijuana cardholders pay just $15 annually to register for the program. Oregon also charges an additional $200 fee to MMJ patients who choose to grow their own marijuana. Colorado has no such home cultivation fee.

And the cost of the doctor evaluation required to receive a recommendation for MMJ is significantly higher in Oregon, often between $200-$250 according to Casey Houlihan, executive director of the Oregon Retailers of Cannabis Association.

In Oregon, medical marijuana patients do not pay state taxes on their purchases, while in Colorado they are subject to a 2.9% state sales tax.

Assuming an MMJ patient in Oregon paid $200 for a doctor recommendation and $200 to register for the program, the individual would need to spend $2,000 annually on marijuana to break even on their exemption from the 25% tax paid by recreational customers.

While certain patients have conditions that necessitate this level of spending, and require the higher potency products available only to MMJ patients, such high costs to entry have many patients who are treating less severe conditions questioning whether it’s worth staying in the program, and choosing instead to purchase marijuana from the retail market.

Oregon’s recreational marijuana program is still in its infancy, as stand-alone retail stores won’t be operational until later this year. So the full impact on the MMJ program is yet to be seen.

But Houlihan believes this is the year where we’ll see to what extent patients decide to keep their cards. And if recent trends are any indication, Oregon may not have the robust medical and recreational markets seen in Colorado.

Eli McVey can be reached at