By Becky Olson
The spending habits of medical cannabis patients can vary greatly by state, with the average purchase amount at dispensaries ranging from $60 in some markets to more than $100 in others, according to a survey of business owners conducted for the 2015 Marijuana Business Factbook.
The amount of money patients spend depends on several factors, including how often they visit a dispensary, the proximity of such businesses to big cities, possession limits, individual preferences, tax rates, size of the caregiver market and, of course, prices.
Many states on the East Coast have strict medical marijuana programs that significantly limit the number of medical dispensaries permitted to operate. A fair share of patients in these markets don’t live close to one of the few operating dispensaries and are therefore more likely to purchase larger quantities, driving up the average spend per visit.
In Maine, for example, only eight dispensaries are allowed under the law. Many of the state’s estimated 15,000 patients live in rural areas, mirroring the population distribution in general.
A lot of patients have to drive somewhat far to visit a dispensary, so they tend to stock up.
Those are just a couple of reasons the average amount Maine patients spend per visit to a dispensary is one of the highest in the nation, at over $100 per purchase.
In addition to quantity, price is another big factor. In general, reported wholesale and retail prices for medical marijuana are higher out east than they are in the west.
That’s in part because the MMJ programs in states like Colorado, New Mexico and Washington State aren’t as restrictive, meaning dispensaries are more numerous. Competition helps drive down prices, and patients typically live closer to a dispensary and don’t purchase as much during each visit.
The typical amount spent by patients per visit in these states is about $70, according to the survey.
The differences are less dramatic in the recreational marijuana market. Colorado rec shops report average transaction amount around $72, while stores in Washington State average around $66.
Interestingly, those numbers are about 10% lower than the average medical marijuana patient spends per transaction in each state.
Taxes are higher on recreational marijuana than medical in both states – making adult-use cannabis more costly. So conventional wisdom says rec customers would spend more each visit.
But many recreational consumers are tourists who are typically buying smaller quantities that last just a day or two versus a medical marijuana patient whose needs are more centered around maintaining an adequate, consistent supply and therefore might buy enough for two weeks or more at a time.
Patient and consumer spending amounts can also vary greatly within a state, with dispensaries in one city sometimes reporting much higher average transaction amounts than those in another area.
Sooner or later, most markets and states will reach some form of general equilibrium.
However, early data suggests that differences in consumer spending habits will persist as long as states are forced to operate in siloed bubbles of the larger industry.
Becky Olson can be reached at [email protected]