Is Utah’s Cannabis Industry Looking Like California’s?

Is it possible Utah’s medical cannabis program may end up like California’s cannabis industry?  The medical and adult-use cannabis trade is so overburdened with regulation and costs that the illegal market in California makes up about three-fourths of existing cannabis sales, according to a 2020 market analysis by Applied Development Economics.  Some Utah legislators expressed their opinion quite strongly that they didn’t want Utah’s program to be like California’s programs before voters passed Utah’s Proposition 2, but here we are.

According to Politico, government opposition and high taxes are part of what is complicating California’s legal market. Politico’s Alexander Nieves reported that California’s strict regulations had led operators to close shops, flee the state or sell their product in the state’s illegal market. High taxes and high credit card fees for the CA cannabis industry have crippled the legal market while helping the illicit market.

California’s laws have also kept the number of cannabis outlets very low. “Licensed cannabis shops in CA are sparsely scattered across the state – there are roughly 2 per 100,000 people, one of the lowest rates in the nation….” A market analysis by Marijuana Business Daily in February 2020 found that close to 3,000 operators operate without a permit compared to 823 licensed shops.

Many states, including Utah, have public officials that do what they can to stifle the legal market, whether medical or adult use. Washington state created a legal-ish market in 2016 with deliberately restrictive rules that were intended to be inconvenient, says Mark Kleiman, a Washington public policy professor who consulted the state’s [Washington] cannabis regulators, said, “The free market is an excellent system for maximizing consumption. That’s why I don’t want it to apply to this product” This after voters in Washington passed a measure legalizing adult use of cannabis.

In Utah, over regulation, high costs, and artificially scarcity all contribute to high prices and a continued thriving illegal market. In Utah, patient caps, a cumbersome QMP program, and limited licensing all contribute to similar problems in Utah’s medical cannabis program. In other states, lawmakers are operating against what citizens voted for, creating cartel-looking programs rather than free-market programs.


Medical Cannabis in Utah

Access to medical cannabis in Utah can be expensive and cumbersome. Most QMPs (qualified medical provider) are limited to 275 active patient cardholders, while specialists can recommend up to 600 patients. Also, anyone under the state law that can recommend cannabis, can do so up to 15 patients without becoming a QMP.

The reasoning behind these caps is to keep providers from having a business that centers on patients that want to try cannabis. This practice adds unreasonable costs to the patient because of administrative costs and the cost to the provider to become a QMP. A provider’s cost to become a QMP is relatively less the more patients they have. These are unreasonable burdens on patients that need to spend time and money looking for a provider that is willing to recommend cannabis and is not over their cap. This reduces access and raises costs to patients. There is no need for patient caps.

Limited licensing markets are having a significant impact on patients in Utah. It goes without saying that the state is under served by the deficient number of medical cannabis dispensaries and grows. As of 5/04/2021, there are 15 dispensaries to serve the entire state. There currently are 8 cannabis cultivation companies in Utah supplying products to Utah dispensaries. Patients’ constant reports that selection is minimal and product shortages are common because the state controls how much product is grown.

Another concerning issue is that Utah processors use Delta 8, a synthetic cannabinoid produced from hemp, in many Utah products because the availability of quality whole-plant cannabis is scarce in Utah. The non-standardized process used to manufacture Delta-8 has not been studied for possible negative effects on humans. The process to capture the very small amount of Delta-8 from hemp derived CBD involves chemicals that probably remain in the product in small amounts after it is manufactured.  Utah allows for 95% purity meaning 5% of the product can be something other than the Delta-8.


Do it Right Utah…For Patient’s Sake

Utah’s medical cannabis program is overburdened with regulation and high costs that adversely affect patients. These conditions certainly do not serve patients and cause the illegal market in Utah and legitimate cannabis businesses to thrive in neighboring states. Patients need to be the first priority.

What can Utah do now to move things along and help patients?

  • Remove patient caps so providers that want to serve patients and to educate themselves on medical cannabis can serve their patients.
  • Move closer to a free market for growers and storefronts to increase the amount of products available and the variety of products. This will also help reduce costs. A free market would help good growers rise to the top.
  • Use standardized labels that contain the information patients need, such as full testing results and the product’s information.

These changes are just a start that would make a huge impact on patients. Artificially low inventory levels, adding synthetic cannabinoids to products, and limiting how many patients a provider can recommend cannabis to all hurt an industry that should put patients first.