Overall sales rose 5.3% in 2016, down from a 46% jump for the previous year, while sales by small caregivers appear to be surging.
Medical marijuana sales at Maine’s eight dispensaries are still growing, but at the slowest rate since the first one opened in 2011.
Growth on the caregiver side of the market, however, appears to be surging, possibly topping dispensary sales, although caregiver sales are not tracked by the state.
Maine residents spent $24.8 million on non-edible marijuana at the dispensaries last year, a 5.3 percent jump over 2015, according to data from Maine Revenue Services. Many industries would cheer that growth rate – in 2015, a 4.6 percent growth in state alcohol sales was hailed as a success – but it is significantly lower than the 40 percent and 46 percent growth in sales that dispensaries enjoyed in 2014 and 2015, respectively.
Non-edible dispensary sales generated $1.4 million in tax revenue for Maine in 2016. Another $157,835 was collected from Maine’s $2 million edibles market.
Timothy Smale, president of the Maine Dispensary Operators Association, said he had not yet reviewed the 2016 dispensary sales data, but a 5 percent growth rate would be “pitiful” because he estimates the market as a whole had grown about 25 percent. He attributed the slower growth to patients deciding not to renew their medical certifications and turning to the thriving black market to find cheaper marijuana products.
“There is a glut of cannabis on the market right now, it’s everywhere, and many of these people aren’t paying the taxes or the overhead of a dispensary,” Smale said. “A lot of people come in (to dispensaries) and they get educated. They’re new to cannabis. They get all this information. They get all these products. They buy from us for a while, and we never see them after a few more months because they find a better price.”
Despite that, Smale thinks the medical marijuana market will continue to grow as patients return to the dispensaries, most of which voluntarily test their products for safety and potency, and as the state gradually expands the list of medical conditions that qualify for a medical marijuana certification.
But dispensary sales do not paint a full picture of Maine’s medical marijuana industry. The number of caregivers – the small-scale growers licensed by the state to provide marijuana for up to five certified patients – skyrocketed in 2016, from 2,277 in January to 3,244 in December, a 42.5 percent increase, state records show. The number of patients is unknown, since state registration is voluntary, but it could have been as high as 51,324 in 2016, records show, a 36 percent year-over-year jump.
Caregivers also are required to charge and turn over sales tax on their marijuana sales to patients, but Maine Revenue Services is not able to estimate that total because it doesn’t track caregivers as a single group. Caregivers’ sales tax can fall under the state’s drug store, forestry, retail or miscellaneous tax categories, making it difficult to track the group as a whole, a state spokesman said.
Sales tax on all non-edible medical marijuana is 5.5 percent, regardless of whether it is sold by a dispensary or a caregiver. Edibles qualify as a prepared food subject to the 8 percent snack tax.
DISPENSARIES VS. CAREGIVERS
Catherine Lewis, chairwoman of the board of Medical Marijuana Caregivers of Maine, estimates that the caregivers side of Maine’s medical marijuana industry represents another $27.3 million in sales a year. That estimate is based on certain assumptions, such as an average of three patients per caregiver and an average patient purchase of about 1 ounce of cannabis a month.
Lewis pushed Maine to establish a special sales-tax category for caregivers so the revenue could be tracked, providing a way to combat the myth that caregivers do not pay taxes and to highlight their contribution to the state economy. But the state refused, saying it was switching old state tax codes to federal codes so that ruled out any special category for taxes collected from something that remains illegal under federal law.
Lewis believes many medical marijuana patients feel more comfortable buying their medicine from a dispensary at first because it resembles a traditional pharmacy, where they are accustomed to picking up medicine. But as patients become more comfortable using the drug they shift to a caregiver, which offers a more personalized relationship and usually lower prices, she said.
“Patients are getting wise,” Lewis said. “They like the one-on-one interaction with the caregiver. Some like the dispensary experience. They can grab it, pay for it and go. But I’m seeing patients with stage four cancer and epilepsy, the really sick people, and they want to sit down and have a conversation and seek customized care.”
Smale takes issue with this characterization, saying patients who visit his dispensary, Remedy Compassion Center in Auburn, enjoy personalized attention.
SHIFTING HABITS, CONFUSION
The 2016 dispensary sales data may not indicate how the average dispensary is doing, but rather how the one company that owns half the dispensary market fared.
The eight dispensaries licensed to sell medical marijuana to doctor-certified patients are owned by five companies. Smale, who co-founded Compassion, and Glenn Peterson, who founded Canuvo Inc. of Biddeford, said their growth exceeded the 5.3 percent in 2016. For example, Canuvo’s revenues jumped 25 percent from $2.4 million to $3 million, despite an inventory shortage caused by the relocation of a cultivation site, Peterson said.
Wellness Connection, which owns four of the eight dispensaries, didn’t have anyone available to comment on dispensary sales. In February, CEO Patricia Rosi told Mainebiz that sales had fallen since voters legalized adult-use marijuana last November. Wellness had about $15 million in sales in 2016, she said, adding that she hoped it could do as well this year.
In February, Rosi told the Legislature’s Committee on Marijuana Legalization Implementation that the state’s medical marijuana program has not really regulated the caregiver side of the market, allowing an illegal market to thrive. The newly approved adult-use market also has confused the state’s medical marijuana patients and doctors, she said.
“Patients don’t get recertified,” Rosi testified. “Medical providers don’t think certification is needed anymore.”
Wellness is asking the state to allow dispensaries like hers to be able to sell recreational marijuana as well as medical pot while the state adopts its new adult-use licensing and regulatory system.
Article Originally Posted on Portland Press Herald. Article by Penelope Overton – Original Article