Pricing, Revenue & Demand Trends in New Jersey’s Medical Marijuana Market

cannabis new jersey

By Omar Sacirbey

New Jersey’s medical cannabis program has shrugged off its sluggish start and is growing rapidly despite having some of the highest prices in the nation.

But the state isn’t ready to add more business licenses anytime soon, and at least one dispensary said demand isn’t quite yet at the levels it expected.

Medical marijuana sales in New Jersey via dispensaries rose roughly 60% last year to hit an estimated $9.6 million, while the patient count jumped by more than 85%, according to data in an annual report released last week by the state.

An average of 250 residents are signing up for MMJ cards each month, putting the program on pace to hit nearly 7,600 registered patients by July 1. Two new dispensaries also opened last year, helping fuel the increases in both sales and patient numbers.

The recent growth is particularly notable given stringent MMJ advertising restrictions and a Facebook crackdown that ensnared several dispensaries in the state.

“Based on the program’s historic lethargy, I’m encouraged by some of the recent growth,” said Steve Schain, a Philadelphia cannabis attorney who follows the New Jersey market.

Still, the state report released last week recommends keeping the number of dispensary licenses at six, the total initially allowed under the law.

The report noted the current combined capacity of the operating dispensaries “exceeds the current patient base.”

It also said that the current purchase limit of two ounces per patient every 30 days is adequate and that prices are not “excessive” when taking into account the cost of living.

High Price to Pay

New Jersey legalized medical cannabis in 2010, but the program has moved along in fits and starts. The first dispensary opened in 2012, and another four have launched since then. The sixth dispensary allowed under the law is currently waiting final approval.

The five dispensaries operating last year sold 1,229.3 pounds of cannabis in 2015, with average prices of about $489 per ounce. That works out to about $9.6 million in sales and just under 3.2 ounces per patient served.

The average price of cannabis in the five operating dispensaries in New Jersey is significantly higher than five other states the report looked at – Arizona, Maine, New Mexico, Rhode Island and Vermont. Other states were not examined, but New Jersey could very well have the highest prices in the country.

To put it in perspective, New Mexico had the lowest prices of the states examined, with an average cost of $284 per ounce, or 41.9% less than in New Jersey.

Prices in New Jersey, however, are competitive with the black market in the state, which charges $400-$450 an ounce, according to the report.

Raj Mukherji, an in-house counsel for the Garden State Dispensary, said MMJ prices are higher in New Jersey for several reasons, including a higher cost of production, tax laws and the fact that dispensaries operate as nonprofits.

“The nonprofit model makes it difficult to raise capital,” said Mukherji. “Regrettably, these factors drive up the cost of providing relief to suffering patients in our state.”

Alex Zaleski, CEO of the Breakwater Alternative Treatment Center in Cranbury, New Jersey, said the cost of electricity is part of the problem as well.

“Our power bills are sky-high. That accounts for a lot of it,” Zaleski said.

More Growth Needed

But Breakwater, the last of New Jersey’s five dispensaries to open, has more pressing concerns.

“We need more patients,” Zaleski said.

Between its launch last October and the end of 2015, the dispensary had served 413 patients, selling 45 pounds of cannabis.

Zaleski estimated that Breakwater has the capacity to serve between 3,000 and 4,000 patients, though it needs about 1,000 to be a sustainable business.

Zaleski said he hopes to reach that point soon.

“We’re not in panic mode. We’re steadily expanding,” Zaleski said.

Other highlights from the report:

  • The four most common qualifying medical conditions patients have are intractable skeletal spasticity (claimed by 34% of those with cards), severe and chronic pain (25.5%), inflammatory bowel disease (11.1%) and multiple sclerosis (10%).
  • The registered patient count rose from 3,727 a year ago to 6,960 in early 2016.
  • Garden State Dispensary in Woodbridge has the largest slice of the market, serving 2,620 patients – or almost 43% of the total – in 2015 and selling 634.9 pounds of cannabis. Compassionate Care Foundation in Egg Harbor has the second-largest slice, serving 1,031 patients in 2015 and selling 302.7 pounds of cannabis.
  • Dispensaries are growing anywhere from five to 27 strains as of the end of 2015 including one to three CBD strains.
  • Since the program started, 452 physicians had registered to participate in the MMJ program through the end of 2015, but only 362 were still active at the end of the year. Of those active doctors, 74% were authorizing patients for the program.
  • A patient registration card costs $200, but about 48% of the patients were on some form of state financial assistance, and received their card at the reduced price.

Omar Sacirbey can be reached at [email protected]

2 comments on “Pricing, Revenue & Demand Trends in New Jersey’s Medical Marijuana Market
  1. carlton robarge on

    Do the people with state assistance get discounted marijuana price too? They cant afford a 200$ medical marijuana card but they can pay 400$ an oz. Sounds good. Wtf is wrong with our country?!

    Reply

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