The medical marijuana market is in a downward spiral as businesses, lured by big money, shift to recreational
In 2015, Erich Berkovitz opened his medical marijuana processing company, PharmEx, with the intention of getting sick people their medicine. His passion stemmed from his own illness. Berkovitz has Tourette syndrome, which triggers ticks in his shoulder that causes chronic pain. Cannabis takes that away.
Yet in the rapidly changing marijuana landscape, PharmEx is now one of three medical-only processors left in the entire state of Oregon.
On the retail end, it’s also grim. At the height of the medical marijuana industry in 2016, there were 420 dispensaries in Oregon available to medical cardholders. Today, only eight are left standing and only one of these medical dispensaries carries Berkovitz’s products.
Ironically, Oregon’s medical marijuana market has been on a downward spiral since the state legalized cannabis for recreational use in 2014. The option of making big money inspired many medical businesses to go recreational, dramatically shifting the focus away from patients to consumers. In 2015, the Oregon Liquor Control Commission (OLCC) took over the recreational industry. Between 2016 and 2018, nine bills were passed that expanded consumer access to marijuana while changing regulatory procedures on growing, processing and packaging.
In the shuffle, recreational marijuana turned into a million-dollar industry in Oregon, while the personalized patient-grower network of the medical program quietly dried up.
Now, sick people are suffering.
“For those patients that would need their medicine in an area that’s opted out of recreational sales, and they don’t have a grower or they’re not growing on their own, it does present a real access issue for those individuals,” said André Ourso, an administrator for the Center for Health Protection at the Oregon Health Authority.
The woes of the Oregon Medical Marijuana Program (OMMP) were outlined in a recently published report by the Oregon Health Authority. The analysis found the program suffers from “insufficient and inaccurate reporting and tracking,” “inspections that did not keep pace with applications”, and “insufficient funding and staffing”.
Operating outside of Salem, Oregon, PharmEx primarily makes extracts – a solid or liquid form of concentrated cannabinoids. Through his OMMP-licensed supply chain, he gets his high dose medicine to people who suffer from cancer, Crohn’s, HIV and other autoimmune diseases. Many are end-of-life patients.
These days, most recreational dispensaries sell both consumer and medical products, which are tax-free for cardholders. The problem for Berkovitz is that he’s only medically licensed. This means recreational dispensaries can’t carry his exacts. Legally, they can only sell products from companies with an OLCC license. Since issuing almost 1,900 licenses, the OLCC has paused on accepting new applications until further notice.
Limits on THC – a powerful active ingredient in cannabis products – are also an issue, according to Berkovitz. With the dawn of recreational dispensaries, the Oregon Health Authority began regulating THC content. A medical edible, typically in the form of a sweet treat, is now capped at 100mg THC, which Berkovitz says is not enough for a really sick person.
“If you need two 3000mg a day orally and you’re capped at a 100mg candy bar, that means you need 20 candy bars, which cost $20 a pop,” he said. “So you’re spending $400 a day to eat 20 candy bars.”
“The dispensaries never worked for high dose patients, even in the medical program,” continued Berkovitz. “What worked was people who grew their own and were able to legally process it themselves, or go to a processor who did it at a reasonable rate.”
But with increased processing and testing costs, and a decrease on the number of plants a medical grower can produce, patients are likely to seek cannabis products in a more shadowy place – the black market.
“All the people that we made these laws for – the ones who are desperately ill – are being screwed right now and are directed to the black market,” said Karla Kay, the chief of operations at PharmEx.
Kay, who also holds a medical marijuana card for her kidney disease, said some patients she knows have resorted to buying high dose medical marijuana products illegally from local farmers markets – in a state that was one of the first to legally establish a medical cannabis industry back in 1998.
Moreover, the networks between medical patients, growers and processors have diminished.
The OMMP maintains a record of processors and the few remaining dispensaries, but no published list of patients or grow sites – a privacy right protected under Oregon law, much to the chagrin of law enforcement.
According to the Oregon Health Authority’s report, just 58 of more than 20,000 medical growers were inspected last year.
In eastern Oregon’s Deschutes county, the sheriff’s office and the district attorney have repeatedly requested the location of each medical marijuana grower in their county. They’ve been consistently denied by the Oregon Health Authority.
Recently, the sheriff has gone as far as hiring a detective to focus solely on enforcing marijuana operations.
“There is an overproduction of marijuana in Oregon and the state doesn’t have adequate resources to enforce the laws when it comes to recreational marijuana, medical marijuana, as well as ensuring the growth of hemp is within the THC guidelines,” said the Deschutes sheriff, Shane Nelson.
As of last February, the state database logged 1.1m pounds of cannabis flower, as reported by the Willamette Week in April. That’s three times what residents buy in a year, which means the excess is slipping out of the regulated market.
To help curb the trend, senate bill 1544 was passed this year to funnel part of the state’s marijuana tax revenues into the Criminal Justice Commission and provide the funding needed to go after the black market, especially when it comes to illicit Oregon weed being smuggled to other states.
The program’s priority is “placed on rural areas with lots of production and diversion, and little law enforcement”, said Rob Bovett, the legal counsel with the Association of Oregon Counties, who crafted the bill.
In a May 2018 memo on his marijuana enforcement priorities, Billy J Williams, a US attorney for the district of Oregon, noted that “since broader legalization took effect in 2015, large quantities of marijuana from Oregon have been seized in 30 states, most of which continue to prohibit marijuana.”
As of 1 July, however, all medical growers that produce plants for three or more patients – about 2,000 growers in Oregon – must track their marijuana from seed-to-sale using the OLCC’s Cannabis Tracking System.
Berkovitz, however, is looking to cut out the middle man (namely dispensaries) to keep PharmEx afloat. “The only way the patients are going to have large, high doses of medicine is if we revive the patient-grower networks. They need to communicate with each other. No one’s going to get rich, but everybody involved will get clean medicine from the people they trust at a more affordable rate.”
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