West Virginia’s potential $40 million medical marijuana program finally is set to launch Friday with the opening of the state’s first dispensary by multistate giant Trulieve Cannabis.
The start of medical marijuana sales comes a whopping four years and seven months after West Virginia approved a law permitting the cultivation and sale of MMJ.
“West Virginia holds the unfortunate record for the slowest state to implement medical cannabis access,” Karen O’Keefe, Marijuana Policy Project’s state policies director, wrote in an email to MJBizDaily.
“Many patients have surely died waiting.”
Delaware held the previous record at four years and one month, according to MPP.
In West Virginia, state officials blamed the slow rollout on a struggle to provide banking services for the program.
MPP also noted that a U.S. prosecutor in the state “exacerbated the problem by threatening to prosecute businesses that enter the medical cannabis space.”
But the tide appears to have turned.
Florida-based Trulieve said it will open a dispensary in Morgantown on Friday and a second in Weston on Nov. 15.
Other businesses are expected to follow in the coming weeks, but overall, the rollout is expected to be gradual.
A limited market
Revised MJBizFactbook projections put 2021 sales at only $400,000 to $500,000, rising to as much as $6 million in 2022 and up to $40 million annually by 2025.
Among the factors expected to restrict sales: West Virginia has banned smokable flower and edibles, which are leading sales generators in other MMJ markets across the country.
But what really makes the market limited is that the state has a population of only 1.8 million, West Virginia cannabis attorney Floyd “Kin” Sayre III said.
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He noted that only 4,400 patients are registered so far, and yet 100 dispensaries were licensed, as were 10 cultivators and 10 processors.
“That’s not a lot of customers (per store),” he said, although the patient numbers are expected to grow over time.
Sayre, a partner in the Charleston-based law firm Bowles Rice, said he has several clients who won licenses, most of them dispensaries.
“A lot of these people are looking at this more as long term,” he said, noting that operators are betting that West Virginia eventually will allow smokable flower and recreational marijuana.
Consolidation expected
Sayre said some of his clients already have received offers to buy their licenses.
He added that operators are allowed up to 10 dispensary permits, and he sees consolidation as companies try to maximize their footprint.
To an extent, that happened in the initial round of licensing, with a number of West Virginia businesses and MSOs each winning four to 10 dispensaries.
In all, 100 permits went to 26 different entities.
“There’s still quite a few independent dispensaries, but I have the feeling that when the market starts to grow, you’ll see more consolidation,” Sayre said.
Trulieve is an example of that.
The Florida-based company won four dispensary permits and a processing license but lost out on one of the 10 cultivation permits.
So, in May, Trulieve proceeded to buy a cultivation license – and two dispensary permits – for only $6 million in cash and stock.
And that came only a month after the company added three dispensary permits for $650,000.
Trulieve quickly broke ground on a 100,000-square-foot cultivation facility and now is poised to be first to market, with others soon to follow.
In a news release, CEO Kim Rivers said Trulieve “is especially eager to leverage our first-mover advantage.”
It’s a playbook the company has used before.
Trulieve’s head start in Florida helped the company claim the top spot in that state’s huge medical marijuana market, but it remains to be seen how that works in the much smaller West Virginia program.
Multiple big players
New York-based Columbia Care, Illinois-headquartered Verano Holdings, Massachusetts-based Holistic Industries and Maryland-headquartered Harvest Care Medical (no relation to MSO Harvest Health & Recreation) each won cultivation, processing and dispensary permits.
Harvest Care and Holistic won the maximum 10 dispensary permits, Verano seven and Columbia Care five.
Columbia Care started building its cultivation facility in July.
Holistic raised $55 million in May partly for West Virginia.
And Harvest Care’s cultivation facility in West Virginia has been under construction.
MPP’s O’Keefe sees parallels between West Virginia and the neighboring Pennsylvania MMJ market.
Both states initially banned smokable flower and edibles, although each has since amended its laws to allow raw flower for vaporization, she noted.
O’Keefe wrote that she anticipates West Virginia’s market will be similar to Pennsylvania’s – “except scaled to a much smaller population.”
Jeff Smith can be reached at jeff.smith@mjbizdaily.com.
