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This newsletter wants to visit Tokelahoma
Word of the week and Oklahoma
Word of the week: medical
Yesterday, in response to Aurora focusing on medical cannabis markets, I wrote:
There is no difference between ‘medical’ and ‘adult-use’ weed! They are the same thing!
There’s a bit more nuance to the discussion than that, and a diligent reader emailed me to make some very good points. She wrote:
To be brief, there are some big reasons to want government-recognized medical cannabis aside from any adult-use market:
Employment and hiring protections for medical patients
CPS protections - making it so medical use cannabis isn't an excuse to take people's children away
Insurance coverage - currently, prescription insurance doesn't cover any cannabis medicine in the US, even in places where MMJ is legal at the state level
Use for minors - Adult use excludes children who have conditions where cannabis can benefit them
Differing needs of medical vs recreational users - recreational users want new and different strains to try, medical patients prefer to have a predictable product available at a constant price
A million small and large protections - gun ownership, being able to fly with medicine in your luggage vs "drugs", etc.
I completely agree with all of that, and the distinction between ‘medical’ and ‘adult-use’ is clearly very important for many people.1 HOWEVER…
Was Aurora’s decision to focus on medical markets based on any of the aforementioned distinctions? No! Their decision was based purely on one thing: competition. Specifically, less of it. I’ll put their direct quote here again, just to hammer the point home:
“Medical cannabis is the absolute lion’s share of profitability right now,” he said, referring to where marijuana companies are making money today.
“(Overseas) you only compete against a couple of companies (in medical), unlike Canada, where we have 250. So these (medical markets) are real, they’re today. They’re great economics.”
It’s all about the economics for Aurora — they’re a corporation, after all.
Also, my original point was more about the product; I doubt that they’re selling any different cannabis in the medical markets (although if I’m wrong I hope another reader calls me out!). They are simply using a form of regulatory arbitrage to sell their cannabis in a more favorable market.2 It can all be medicine.
Speaking of medical markets…
It might surprise you, but Oklahoma has one of the most robust medical cannabis programs in the nation. In fact, the medical market in the Sooner State is even more competitive than most adult-use markets. Here’s Paul Demko at Politico, with a great piece called “‘Tokelahoma’ at the Crossroads”:
No state in the country has been as radically transformed by marijuana legalization as Oklahoma. Long notorious for locking up a higher share of its citizens than any other state — tens of thousands of them for non-violent drug offenses — over the past five years, Oklahoma has become a free-market weed utopia. Or, as some might say: a dystopian lesson in supply and demand.
There are now roughly 12,000 licensed medical marijuana businesses in the state, including more than 7,000 grow operations and nearly 3,000 dispensaries. That includes nearly three times as many dispensaries as there are in California — which has roughly 10 times the population. The main reason for this explosion of entrepreneurial activity: There were initially no limits on how many licenses can be issued, and they cost just $2,500 to procure.
Nearly 400,000 Oklahomans are enrolled in the medical marijuana program, roughly 10 percent of the state’s population, by far the highest level of participation on a per capita basis in the country. There are no qualifying conditions for the medical program, so pretty much anyone who wants a card can get one. More than $3 billion worth of weed has been sold since Oklahoma’s program launched in late 2018, after voters backed a medical marijuana legalization referendum.
Yesterday, Oklahomans went to the polls to vote on a recreational weed legalization referendum. And they overwhelmingly rejected it!
Second, there was a lot of news in the months leading up to the election about illegal grow operations; particular emphasis was placed on Chinese nationals. This is of course related to point #1 as well.
But the third reason might be that the medical market is serving Oklahomans just fine. There are plenty of shops, it’s easy to get a medical card, and they have the added benefit of all of the extra protections we talked about.
Who would an adult-use market eventually serve? Out-of-staters, particularly from Texas. That could be big business, certainly, and projections showed an increase of almost $2 billion in sales if the measure had passed. But do Oklahomans want that? Here’s Brian Box Brown with more on Twitter:
And here’s the expert on Maine (@MaineConsumers) with more on what happened there and why Oklahomans may have rejected the measure:
No matter the reasons, there are important lessons to be learned here, for both activists and corporate interests in other states looking to legalize. Now, if you’ll excuse me, I have a flight to catch to visit this incredible Merle Haggard-/Bob Marley-themed shop:
According to Investopedia: “Regulatory arbitrage is a corporate practice of utilizing more favorable laws in one jurisdiction to circumvent less favorable regulation elsewhere. This practice is often legal as it takes advantage of existing loopholes; however, it is often considered unethical.”
Does anyone else just want Tucker Carlson to smoke a joint and CHILL TF OUT?