Medical cannabis business opportunities could expand this year

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

A fresh set of rules and/or regulatory medical cannabis policies could be introduced in several states in 2020. This is according to director of state policies for the Marijuana Policy Project, Karen O’Keefe. She believes that medical cannabis could see exponential growth this year, what with lawmakers in legal states admitting that the “dire predictions of opponents don’t materialize.”

“Just about every (MMJ) program has been slowly expanding and improving,” O’Keefe said in a recent interview with Marijuana Business Daily. “I think those trends will continue.”

If O’Keefe is correct in her predictions, the market could soon be flooded with business opportunities, license applications, ancillary business partnerships and increased sales for existing operators. She sees major opportunity in eight particular U.S. states: Arkansas, Florida, Iowa, Maryland, Minnesota, New Hampshire, New Jersey and Rhode Island.

Legal cannabis industry is doing well, despite COVID-19 crisis

In spite of the fact that the coronavirus (COVID-19) pandemic has had a detrimental effect on the global economy since 2020 began, this is not to say that hopes for cannabis industry growth have been dashed and divided just yet. Surprisingly, the crisis has had a positive effect on the cannabis industry in many states, some of which have seen a surge in sales as consumers scramble to stock-up on essential supplies. 

In this post we will take a closer look at the medical cannabis opportunities that are still likely – despite the current economic climate – to blossom in some legal states this year:

  1. Arkansas 

Medical cannabis patients in Arkansas are frustrated at the lack of license holders, meaning that more businesses/greater access is needed. The State of Arkansas wants existing license holders to kick-start operations, with just 17 having opened their doors as of February this year; the first cannabis retail store opened its doors in May 2019. Sales for 2019 totaled $228 million, according to State data. 

“It would not be surprising to see additional licenses issued,” said Arkansas medical cannabis spokesman Scott Hardin. Surging demand has already prompted the state to award a Pine Bluff applicant with the 33rd available license. The number of licensed dispensaries rests at 32, with two cultivators also awaiting the launch of their businesses.

2. Florida

In regards to medical cannabis opportunities in Florida, we can expect to see efforts for reduced licensing limitations. A prospective edibles market could soon launch in the nation’s fastest-growing market; something that would strengthen sales figures. In 2019, dispensary sales were in the range of $450 million-$550 million. 

Currently, 13 vertically-integrated operators serve consumers in Florida. By the end of January, the total number of licensed companies was 22. At some point this year, there’s a chance that the vertically-integrated licensing structure will be abolished; the Florida Supreme Court will consider offering individual business permits. If this does happen, the application process for individuals wouldn’t launch right away, since new licensing rules would first need to be drafted. 

3. Iowa

Democratic lawmakers want to expand qualifying patient conditions and dispensaries for Iowa’s medical cannabis market, which pulled in $5 million-$6 million in 2019. In the event that the program/industry is expanded, suppliers and dispensary owners will get a business boost. 

Five dispensaries are currently in operation throughout Iowa, where a three percent THC (tetrahydrocannabinol) cap has been imposed on all legal cannabis pharmaceuticals. Republican Governor Kim Reynolds is supportive of expanding the number of dispensaries – as well as adding new conditions to the eligibility criteria – thus giving Democrats hope that they’ll get their way.

4. Maryland 

License applicants are awaiting a decision in Maryland, where $252 million worth of medical cannabis was sold inside dispensaries in 2019. This figure could rise significantly if the four cultivation and 10 processing licenses up for grabs are finally awarded by the Maryland Medical Cannabis Commission (MMCC); over 200 applicants went head-to-head last year to join Maryland’s medical cannabis industry.

5. Minnesota

Two vertically-integrated operators want to legalize smokable flower in Minnesota — Vireo Health-owned Minnesota Medical Solutions and LeafLine. The legalization of smokable flower products could improve affordability for consumers and maximize sales revenue. In 2019, Minnesota’s medical cannabis dispensaries which operate within one of the most restrictive programs in the country pulled in $35 million-$45 million.

6. New Hampshire

New conditions could soon be included on the state’s list of qualifying conditions for medical cannabis in New Hampshire. Combined sales from licensed medical cannabis dispensaries totaled approximately $20 million-$25 million in 2019. Insomnia and opioid use disorder are two qualifying conditions that were recently added to the state’s list of eligibility criteria by the House; a move that could amplify sales revenue if it receives Senate approval.

7. New Jersey

Delays in awarding dispensary licenses are hindering the growth of New Jersey’s medical cannabis market. An estimated $95 million-$120 million was harvested by the state in dispensary sales last year. While these sales figures are promising, patients have limited access to their medicine, with just seven dispensaries serving approximately 60,000 registered patients and counting. 

Fortunately, 24 additional dispensary licenses are yet to be awarded. However, applicants are becoming impatient due to legal delays. This year, we should see some progress in this area and, consequently, fuel for medical cannabis market growth.

8. Rhode Island

This year could present dispensary operators in Rhode Island with new license opportunities. Dispensary sales in 2019 were in the range of $50 million-$65 million. Three dispensaries and 51 independent cultivators are currently operating in Rhode island’s medical cannabis market. Budding business owners should be on standby, because the state is anticipated to distribute six additional retail-only dispensary licenses among lucky applicants this year. New license options may also be revealed in 2020.

U.S. medical cannabis market forecast to grow exponentially 

In spite of the fact that the spread of COVID-19 is creating a great deal of concern across the U.S. and the rest of the world right now, a lot of potential lies in America’s legal market. Leading global technology research and advisory company Technavio has been keeping a close eye on the U.S. medical cannabis market since its inception. Analysts from the film predict that sales will top $22.33 billion over a four year period ranging from 2020 to 2024; inflating at a compound annual growth rate (CAGR) in excess of 24 percent during the forecast period.

In a separate report – the U.S. Cannabis Report 2019 Industry Outlook – combined legal sales of both medical and recreational cannabis will see a CAGR of 14 percent within the next six years; expected to reach almost $30 billion by 2025. With estimates like these, cannabis is a welcome addition to the U.S. economy and by the time COVID-19 outbreak dissipates, the industry’s restorative potential is sure to be acknowledged on a grand scale.