River Crossing Strategy Group

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Contact: Timothy White | Published On: Friday, October 30, 2020
N.J.'s medical marijuana chief douses senator’s pipe dream of legal weed for sale immediately after the election

Not long after state Sen. Nick Scutari claimed on Tuesday legislators and regulators may “be able to flip the switch and people might be able to get marijuana, legally, right after the vote,” the head of the state medical cannabis program doused that pipe dream with a bucket of cold water.

“(Some dispensaries) literally do not even have the space to accommodate the level of demand that personal-use sales would bring,” said Jeff Brown, who helms the Department of Health’s Medicinal Marijuana Program. “I could say unequivocally that opening up sales even a few months after the election would be a disaster and would really hurt access for patients who need this as medicine. My number one priority is to ensure that the patients have access — that’s going to be our priority first and foremost.”

Since the passage of Jake Honig’s Law, the medical program continues to grow in terms of patients and demand — about 7,000 patients per month on average and nearly 95,000 patients enrolled in total — but the program continues to face supply challenges for just the current patient population due to the small number of operational cultivators and canopy space.

Scutari, in his comments during an interview with NJ Cannabis Insider streamed live on NJ.com’s Facebook page Tuesday, that “(the) currently operating medical cannabis dispensaries would have an opportunity to sell to the general public for people over 21, if they can certify that they have enough product to satisfy their patients that they’re already treating.”

Brown, who also participated in a closed portion of the webinar, tamped down the senator’s suggestion at the time. He said he wants to keep an open dialogue with legislators and make the program’s priorities clear to medical patients and Garden State citizens as a whole.

“Inventories at alternative treatment centers are increasing, too, but it’s uneven,” he said. “We have some that are expanding capacity and then we have others that are simply maintaining and have really no room to expand cultivation in their current footprints.”

For the past six months, Brown said, the medical cannabis program has averaged about only 2,100 pounds in sales per month, rising to nearly 2,500 in September with a similar trend in October. Based on an average of the patient population, patients typically only buy a half-ounce each month, he said.

As of this past Friday, Brown said, there were about 10,000 pounds of medical cannabis in the market — about evenly split between flower and extracts, though flower tends to have higher sales. That means there’s enough medical cannabis to last about four months, given current sales trends and more limited choices for patients.

Part of the challenges dispensaries face, Brown said, is the small indoor canopy. There’s a dozen cultivators in New Jersey, but the average dispensary only has a canopy of about 17,000 square feet, with the smallest canopy at less than 10,000 square feet and the largest at 40,000 square feet. By comparison, Connecticut, where medical cannabis is about half the cost of New Jersey’s, has only four cultivators and about half the patient population of the Garden State but each cultivator has a space of about 60,000 square feet, Brown said.

New Jersey’s average cost for an eighth of an ounce is $60. Connecticut’s cost for most products is up to $35. So New Jersey patients are paying $320 for a half ounce; while in Connecticut it’s no more than roughly $140.

Moreover, with fewer than 100,000 patients in the New Jersey medical program, a massive influx from the remainder of Garden State’s population of 8.9 million — not to mention the greater metropolitan populations in New York and Pennsylvania and farther beyond — could swell the potential market even more.

“Dispensaries would need to accommodate new customers and with the influx of new patients that we’re seeing with new business processes that dispensaries have put into place because of COVID, many are extremely busy,” Brown said. “While most dispensaries can get new patients in quickly, there’s one dispensary that has a six-week wait currently for new patients and we’re working with them to try and get that down. But it’s just, they can’t handle the volume of even the patients that they’re seeing.”

To put it clearly, Brown said the operations of the current licensees operations are not enough to meet the demand of adult-use sales.

“Twelve cultivators, that’s not an infrastructure to start a personal-use cannabis program,” he said. “If we talked about what would need to happen, hypothetically, we would need to see drastically expanded cultivation.”

In the event of adult-use legalization, Brown said the medical program and adult-use sales would rely on both the current industry and new participants in the market.

“Even just talking about the current industry, is we need more dispensaries, because there are many (dispensaries) that even if they had the inventory — if we said tomorrow you could sell personal use cannabis but you have to serve patients first — they would have a line of personal-use cannabis customers who would never be able to get in the store because they are so busy serving patients,” he said. “So you need more dispensaries. And then just on the policy side, this is what’s going to be critical, is ensuring we have policies in place, protocols that ensure guaranteed access for patients, even with the demand that we’re going to see for personal-use cannabis.”