The legalising of recreational marijuana can have a negative impact on a jurisdiction’s medical cannabis sector. Here are some numbers.
The recreational use of cannabis is now legal in 23 U.S. states, three of its territories, and District of Columbia. Added to that, another eight states have decriminalized its use. There are big bucks involved – one estimate puts the 2023 U.S. legal cannabis Total Addressable Market (TAM) at USD $28.9 billion.
Legalising marijuana can have a detrimental effect on state medical cannabis programs. According to Zuanic & Associates:
- Michigan has seen an 80% drop in medical sales from its peak, with monthly sales dropping from $29 million to $6.1 million.
- Arizona’s medical patient count plummeted 57% over 2.5 years. July 2023 medical sales reached $28 million, down from a $65 million peak.
- New Jersey has experienced a 40% drop in medical sales over a year, from $59 million in 4Q21 to $34.5 million in 1Q23.
- Missouri down 39%
- Massachusetts down 33%
- New Mexico down 10%.
States that have managed to sustain medical cannabis sales, such as Illinois and Connecticut, have been able to do so due to factors such as low dispensary counts for recreational sales according to the firm. But even in Connecticut, there have been signs of a looming decline in medical cannabis sales.
“For the most part, our read is that, typically, ahead of rec legalization, one-third to half of the med is what we would call ‘pseudo rec.’,” says Pablo Zuanic from Zuanic & Associates. “The actual impact will be a function of the strength of the rec market (access, assortment, prices), and of how developed the med market was before the start of rec sales.”
But is recreational marijuana eating medical cannabis’s lunch a problem? It can be. As manufacturers shift focus to the recreational market, it can impact on availability of supply of certain medications. It also impacts on the financial viability of state medical programs, which aren’t cheap to run. And where recreational laws in relation to production quality are a little lax; it can mean patients gravitating to adult-use products may not be getting a consistent product, or one of comparable quality.
