Chart of the Week: MMJ Demand Booming in Washington DC, Creating Inventory Shortages

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After a painfully slow start, Washington DC’s medical marijuana market is flourishing as more patients and physicians sign up to participate in the city’s MMJ program.

Loosened regulations over the past year or so have helped drive the number of registered patients up 1,000% since May 2014 to 4,000 currently, while the number of recommending physicians has more than doubled during that time to hit 244, according to Washington DC’s health department.

Additionally, all five of the legally approved dispensaries are now operational, as are seven of the 10 permitted cultivation centers.

It’s a big turnaround from just two years ago, when patient totals were in the low 100s and medical cannabis businesses worried about their survival.

Still, the spike in demand hasn’t necessarily translated into increased revenue and profits for dispensaries – at least not yet.

While dispensaries have certainly experienced growth in their customer bases, cultivation centers have struggled to keep up with demand and rapidly changing regulations – particularly with regard to plant count and zoning.

That’s created a severe supply shortage, according to Rabbi Jeffrey Kahn, owner of Takoma Wellness, a dispensary that has been open for the past two years.

As a result, dispensaries haven’t been able to fully capitalize on the increase in demand.

“Our monthly income has been stuck at $150,000 since September 2014,” Kahn said.

Previously, patients were limited to five conditions and cultivation centers were limited to 95 plants, Kahn said. At the end of the first year of DC’s MMJ program, there were just 300 patients in the program.

“Patients were well served with abundant medicine, but the program was financially unsustainable,” Kahn said.

In June of last year, however, the health department increased the allowable plant count from 95 to 500 and specific medical conditions were eliminated, allowing doctors to recommend MMJ for any reason.

“By September 2014, the patient count had reached over 2,000 and medicine became short in supply,” according to Kahn.

He said dispensaries started placing severe restrictions on the quantity patients could purchase at a time, and cultivation centers struggled to increase plant counts quickly enough to make up the shortfall in supply.

Additionally, a governmental edict in May of this year mandated all remaining license holders to open their doors within 60 days or risk losing their permits. Several cultivation sites have gotten special extensions and have not yet produced a harvest, and some dispensaries that recently opened have no little to no inventory to actually sell.

All that being said, bluer skies are on the horizon. The city has boosted allowable plant counts for licensed grows to 1,000, while demand is higher than ever. And luckily for dispensaries, growers have not raised their prices.

“A few months ago, (dispensaries) were serving 3,000 patients in the program with less than 500 plants growing in total. Now we have 4,500 patients with more than 5,000 plants growing in total,” Kahn said. “We hope this painful shortage will be only a bad memory by the end of the year…(and) we are confident sales will increase when supply does.”

Becky Olson can be reached at