New York has had active medical marijuana since January 2016, but the financial returns remain sparse. With only 14,000 patients prescribed medical cannabis in New York, the Empire State’s five fully integrated cannabis entities are struggling financially.
Those five companies — which grow and sell their own cannabis products at their own dispensaries — have reportedly not even come close to making a return on their substantial investments. While there’s certainly supply in New York, the demand simply isn’t there for a state with nearly 20 million people yet only 14,000 patients.
Vireo Health’s president, Ari Hoffnung, bluntly told The Buffalo News that his company’s four locations are struggling to make ends meet:
“Our company is not close to break even yet. And based on my understanding, no one has made a dime here in New York…Twenty percent of us have already failed.”
The flailing industry has already forced one licensee with financial troubles to sell its business and license to a Californian entity. Because starting a marijuana business comes with lots of inherent overhead costs like electricity, water, real estate, legal fees and employees, the entrance point is high and the risk is equally high.
From the start, each of New York’s five licensed businesses invested $210,000 in application and registration fees just to receive licenses. Add the immense overhead costs of running multiple grow and dispensary facilities, and each of these businesses has well over seven figures invested and perhaps as much as $30 million dollars, according to a MarketWatch report.
When asked by The Buffalo News whether or not his company is in the green, general counsel of PharmaCannabnis, Jeremy Unruh, shared his competitors’ sentiment,
“No, we’re not. If by profit you mean are we making more each month than we spend? No.”
According to an “industry insider,” the supply outweighs the demand to the extent that each company could cease operations today and have enough supply to last the state eight months. Hofnung stated that Vireo or any of the other companies alone could supply the entire state’s medical marijuana economy.
The issue is twofold, as Senator Diane Savino stated, “There are two things the program is lacking: physicians and patients.”
The state only has 900 licensed physicians and nurse practitioners issuing medical marijuana. The state’s 14,000 patients would balloon to 200,000 patients if opened up to more conditions like PTSD and chronic pain.
Currently, New York’s qualifying conditions are limited to ALS, Cancer, Epilepsy, HIV/AIDS, Huntington’s Disease, Inflammatory bowel disease, Parkinson’s Disease, MS, Neuropathies and Spinal cord damage. Moreover, New York’s medical marijuana patients are prohibited from smoking cannabis; they can vaporize, eat edibles and use tinctures.
Nonetheless, the program’s shortcomings are not slowing down the state’s program. The Cuomo administration will dole out five more grow-and-distribution licenses to five of the original 43 companies that applied for a medical marijuana license.
Those additional licenses will add to the excess in supply with failing to address the issue of demand.
New York’s medical marijuana landscape might currently look bleak, but the state’s program will evolve and the Empire State will eventually become a beacon for medical marijuana. The question remains: when that day comes will any of the five companies struggling to make end’s meet be around to see it happen?