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Maine is Losing Medical Cannabis Companies to the Recreational Market, Report Suggests

By Leo Bear-McGuinness

Published: May 03, 2023   
A cannabis dispensary storefront.

Image credit: iStock

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Over a thousand licensed companies have left Maine’s medical cannabis market in the past two years, according to a new report from the state regulator.

Why? Well, according to a survey conducted by the regulator, most companies think the state is too flushed with low-price cannabis to compete.

Exile on Maine’s high street

Between the end of 2021 and the end of January 2023, the Maine Medical Use of Cannabis Program (MMCP) noted that over 1,350 cannabis companies exited the state’s medical program, a net loss of over 800 companies.

To understand why so many companies quit the industry, Maine’s Office of Cannabis Policy (OCP) sent a survey to all 1,350 dropouts; 117 answered it (a response rate of 8.7%). Most respondents (71.7%) previously cultivated cannabis, either for direct sales or for wholesale.

From a list of possible reasons, “over supply of product/lower prices” was selected as a top five issue by 68 of the 117 respondents (58.1%). The second most selected reason was “utility costs” (48.7%), then “business costs”, then “banking regulations/fees”, then “competition with the adult use market”.

The OCP says the results of the survey change the “narrative” of the recent medical market exodus.

“These findings depart dramatically from the rumors and speculation about what has happened within the MMCP,” the OCP authors wrote in their report.

“Part of the unsubstantiated narrative centers on caregivers’ unhappiness with OCP in its regulation of the program. The data suggest this take represents a distinctly minority view.”

Rather, the survey results suggest that most companies left the sector due to rising costs and lower product prices (due to an oversupply in the market from recreational cannabis businesses).

“We have allowed big businesses to come in and open recreational cannabis grows and stores,” one survey participant wrote.

“Nobody in the public domain wants to pay $50 for a medical card. Nobody with a small business can afford to compete with the over saturated market, at a time when prices are going up on electricity and rent (more than double) the recreational market has destroyed medical simply by growing more and dropping prices to rock bottom.”

Maine’s medical cannabis program first began back in 1999, before receiving significant expansions in 2009 and 2018.

Following voter approval in 2016, recreational cannabis also became legal in Maine in October 2020. And the market has been growing ever since. Almost $159 million was generated in product sales in the state last year, according to the OCP. That’s about $82 million more than was made in 2021.

The OCP says its survey findings are “eye opening” and illustrate the problems plaguing the state’s cannabis sector. Yet, the regulator says its report also “offers an opportunity.”

“This survey makes clear that the biggest issue facing the medical program is oversupply,” OCP Director John Hudak said in a statement.

“That oversupply has led to massive drops in wholesale price, making it difficult for registrants to endure mounting energy costs and other market conditions.”

“This is a complex set of problems, but the data provide a roadmap to enact changes that can help stabilize the medical cannabis market and protect access for Maine’s 106,000 medical cannabis patients.”

 

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