Industry News

Oklahoma’s Medical Cannabis Industry Oversupplied by 32-Fold, Regulators Say

Oklahoma’s Medical Cannabis Industry Oversupplied by 32-Fold, Regulators Say

The Oklahoma Medical Marijuana Authority (OMMA) released a comprehensive third-party study on Wednesday, quantifying the huge supply glut that has existed in the state’s medical cannabis market.

The study, conducted by Cannabis Public Policy Consulting, found that Oklahoma has 32 times more regulated medical cannabis than needed for its licensed patients — pinpointing what was already known about the state’s laissez-faire landscape.

In a statement, OMMA’s executive director Adria Berry highlighted the urgency of addressing the issue as a matter of public health safety.

“It is essential that we address this oversupply head-on, not only to ensure the integrity and sustainability of our medical marijuana market for our patients but to promote public safety and mitigate dangers that coincide with illicit marijuana activity for all Oklahomans,” Berry said.

The study offered a closer look at Oklahoma’s medical marijuana supply-and-demand dynamics, positing that there are 64 grams of regulated medical cannabis supplied for every gram demanded by a licensed patient. It suggested that a healthy market should exhibit a ratio of 2:1 for supply to demand, underscoring the extent of the oversupply issue in the state.

Among the study’s key findings were several concerning, yet known implications for the state’s industry. It suggested that the excessive oversupply of regulated cannabis likely contributes to an illicit market at the cultivation and retail sales stages. The combination of the oversupply and the state’s low barriers to market entry indicate that the illicit market might be “hiding in plain sight.”

The research also found that about 43% of cannabis consumed by Oklahomans comes from illicit sources and pointed to a lack of production management tools in the law as a contributing factor to the oversupply issue. The study implied that subregion-specific supply and demand discrepancies could indicate potential out-of-state diversion of cannabis products, but further research would be needed to support this.

Berry emphasized the need for strategic partnerships, stringent oversight, streamlined compliance monitoring and smart policy advancements to “foster an environment that promotes safety and prevents large-scale diversion,” she said, adding that the agency was committed to transparency and promised updates on their progress.

The report incorporated time-matched, within-state measures of cannabis supply and empirical market-specific demand. It drew upon a representative sample of over 1,300 past-year cannabis consumers from 68 of Oklahoma’s 77 counties, which it dubs “one of the most methodologically valid sets of findings available.”

In response to the study findings, OMMA, along with the state’s Bureau of Narcotics and Dangerous Drugs and the legislature, has taken a sword to the issue, including pursuing production management tools, extending the moratorium on cultivation licenses until 2026 and incorporating a tiering system of cultivation to better track and account for supply.

Additionally, the state said that its utilizing intelligent regulatory technology to identify enforcement priority areas, increasing enforcement staff presence regionally and authorizing officers to seize and destroy cannabis product unaccounted for in track-and-trace systems. The efforts will look to to improve the supply-to-demand ratios and maintain a healthier market, it said.

OMMA plans to use this study as a baseline to evaluate the effectiveness of these efforts over multiple time periods. To continually evaluate the supply-to-demand ratio and gauge the effects of any strategic efforts by OMMA, the study suggested that similar research be conducted in the future.

What about retail count?

A January analysis by cannabis research firm Pink Horse Capital suggested that the right number of legal cannabis retail outlets is crucial for the licensed industry to compete effectively with the illicit market. The firm recommended assessing alcohol’s retail footprint as a benchmark.

In the case of Oklahoma, the state’s relaxed approach to its medical cannabis program led to a higher number of sign-ups than the number of users self-reporting usage in pre-legalization surveys. However, Oklahoma’s “open-range” cannabis market is reaching its limits, threatening the profitability of operators in an industry devoid of significant federal tax breaks or banking services.

The study stresses that retail footprint and local opt-out rules are significant determinants of spending. It also suggests the regulations of a state’s program, such as supply chain regulation, store count limits, tax rules, limitations on ownership of state licenses and rules for prescribing doctor impact the growth of a given market.

Despite the challenges, the firm believes that the U.S. market, including Oklahoma — especially if it decides to go adult-use amid a state-backed compliance crackdown on cannabis businesses — has room for sustainable growth due to its underutilized retail footprint, especially when compared to countries like Canada.

However, the study emphasized that the sheer number of dispensaries is not enough to support a fully legal market and factors like cost, quality, selection, and safety must also be considered.

The post Oklahoma’s Medical Cannabis Industry Oversupplied by 32-Fold, Regulators Say appeared first on Green Market Report.

This content was originally published here.