Two of the newest medical marijuana markets are confronting the numbers behind the cannabis economy.

A new University of Missouri report shared by the Missouri Department of Health outlines a sharp contrast between the number of licensed medical marijuana businesses mandated by the voter-approved Amendment 2 and cannabis supply-and-demand estimates based on nearby U.S. states. In short, Missouri’s medical marijuana regulators may have overestimated the marketplace.

“Based on evidence from across 19 states and over time,” the report states, “we project that the number of Missouri qualified patients will be approximately 19,000 in 2020, 22,500 in 2021, and 26,000 in 2022.”

To meet that demand, according to the report, the state will need between 115 and 132 dispensaries by 2022.

The legislation spurred by Amendment 2 requires 192 dispensaries by the end of this year.

Chief among the concerns is the relationship between Missouri’s impending licensed medical marijuana marketplace and its existing illicit market.

“Both price and quantity reports are critical for regulators to properly monitor developments in the medical marijuana market and to limit opportunities for legal medical marijuana to be diverted to the illegal recreational market,” according to the report. “There are a number of actions already undertaken to address the potential diversion from the legal medical market to the illegal recreational market. Specifically, the application fees for participants in the supply chain … are large enough to incentivize firms to abide by the law. In addition, the seed-to-sale technology is an important monitoring feature to deal with the potential moral hazard in the legal medical marijuana market.”

The price point is important: Already, saturated markets in Oregon and Washington (among others) are seeing plummeting prices and a growing sense of anxiety over where excess product will end up. The University of Missouri medical marijuana report insists that the state “will need between 10 and 14 cultivators in 2020, 18 to 24 cultivators in 2021, and 24 to 29 cultivators in 2022” to fill dispensary shelves and meet patient demand. Again, Missouri law requires 60 cultivation license-holders. (Medical marijuana sales aren’t expected to begin until early 2020. The state will issue patient registration rules sometime before June 4.)

The report has started a conversation, but its findings are not being taken as gospel. Researchers looked to Washington, Arizona, Massachusetts and Colorado to complete the document, writing that those states “offer the most complete data available.”

In Arizona, for instance, where a medical marijuana law was first approved in 2010, patient counts have steadily risen year-over-year to a 2018 count of 186,002. Arizona’s population is approximately 7 million to Missouri’s 6 million.

But with the report leaning so heavily on states with more mature medical marijuana markets, the data leaves out states that find themselves in similar positions, timing-wise, to Missouri.

Missouri, of course, is entering the medical marijuana economy around the same time that other successful 2018 ballot initiatives are legalizing sales in Oklahoma and Utah.

“Oklahoma is a state that's obviously only two-thirds the size of Missouri and they passed their medical marijuana law last summer,” Jack Cardetti, spokesman for the Missouri Medical Cannabis Trade Association, told KCUR. “They are already have more than 78,000 certified patients in the state of Oklahoma. So, the fact that Missouri would only have 26,000 patients after a three-year period it doesn't make any sense.”

But in Oklahoma, regulators and business owners are confronting a similar issue.

As of April 8, Oklahoma had issued 1,263 medical marijuana dispensary licenses. A recent KJRH news report highlights the competition separating successful business from others in these early days. (Oklahoma dispensaries were allowed to begin sales in December 2018.)

"It's going to be too much. I mean there's going to be more dispensaries than there are Starbucks," Sandy Hardy, the owner of Medijuana dispensary in Tulsa, told the news station. "In any market in the U.S., places that don't regulate how many dispensaries there are allowed ends up getting saturated.”

The state has registered 96,808 patients, as of April 8. At present count, that’s 76 patients per dispensary. Among this latest wave of medical marijuana laws, Oklahoma’s is by far the most liberal, from a regulatory and licensing perspective.

To use Ohio as a third example, although no state-by-state comparison is perfect in the cannabis space, 56 licensed dispensaries will serve a current patient base of 24,556 (as of March 30). That’s 438 patients per dispensary.

Last fall, on the heels of Oklahoma’s medical marijuana victory, a sense of cautious optimism was already in the air. “We need to be careful about how our market evolves,” Bud Scott, director of the trade group New Health Solutions Oklahoma, told the Tulsa World. “But this is what the people voted for and our legislature decided not to take any real actions to implement control we’ve seen in other markets, so now here we are. It’s kind of survival of the fittest to see who makes it and who doesn’t.”

