What Makes Virginia’s Cannabis So Expensive, and When Will Prices at Dispensaries Come Down?
If you have qualified for your medical marijuana card and have been checking out Virginia dispensaries, chances are you’ve noticed something significant— the prices. Especially if you have compared Virginia to other popular markets, including Colorado and California, you have likely noted that the Virginia prices right now are pretty steep. What gives? Why are Virginia medical marijuana prices high for the time being, and what will these prices do in the future?
While they will come down eventually as the industry grows and adjusts, let's take a look at what factors are influencing the prices right now and what factors will usher in that happy day when Virginia prices will start ticking downward!
Virginia Prices: The Current State of Affairs
Just how high are the prices in Virginia right now? A quick review of Columbia Care’s DC dispensary location (known as Capital City Care) as compared to the company’s Virginia location in Portsmouth shows that prices in Virginia can be nearly double those for similar products in the District. As an example, 3.5 grams of flower in DC can cost as little as $35, while a similar product in Virginia starts at $65 per 3.5 grams. These prices are on par with other states that have recently legalized cannabis, including nearby Pennsylvania.
Market Factors Driving Up Prices in Virginia
Given all this, what is driving these prices for medical marijuana in the Commonwealth? Why is medical marijuana in Virginia coming at a premium right now? There are several market factors involved, so let’s look at each in turn.
The Marketplace of Patients
When your consumer base for a specific product is smaller, chances are the prices of sold goods will be higher. Currently, there is a limited number of patients who are eligible to purchase medical marijuana in Virginia.
This is not due to a lack of enthusiasm. In fact, there are over 30,000 applications in the system right now. What is limiting the number of patients accessing medical cannabis in Virginia is the bureaucracy itself. As the Virginia medical marijuana system tries to keep pace and get back up to speed, there will continue to be a backlog for some time when it comes to processing applications for medical marijuana cards. As soon as the bureaucracy catches up, the consumer base for medical marijuana will widen and begin to do its part to drive down prices.
The news is positive on this front. Recently, the Commonwealth announced that it would be adding more staff to process applications, which will hopefully widen the marketplace of consumers soon. In the meantime, the limited pool of buyers is definitely partially responsible for driving prices up in the state.
For now, Virginia has only approved 5 state-sanctioned growers. Those growers, too, are only sanctioned to sell their products in their pre-assigned health service areas. Limiting the reach of these businesses is good for regulatory controls from the government’s perspective, but it does put a burden on these enterprises and limits their revenue streams somewhat. As a result, you get— you guessed it— higher prices for the consumer.
Demarcating the sales of medical marijuana into health service areas is not going to change anytime soon. As more and more citizens get their medical marijuana cards, however, these businesses may access new revenue streams within their HSAs that will allow them to lower prices over time.
Finally, regulations are a factor, too, in temporarily driving up prices in Virginia. The state’s regulations regarding medical marijuana are pretty detailed and involve requirements not seen in other states. For one, the Commonwealth is one of only a handful of states that require oversight of cannabis production and sales by a pharmacist.
Additionally, Virginia also requires that pharmacists be present on-site at dispensaries so that these medical professionals can consult with consumers while they are making their purchases. All of this adds to the overall production cost for the product, which of course translates over to the cost for the consumer in the end.
Similarly high prices have been seen in Pennsylvania recently, where regulation and associated factors similar to those seen in Virginia drove up costs last year. Patients in Pennsylvania, as of last year, were paying as much as $120 per week for their medical marijuana supply.
Additional Operational Costs and Internal Factors Affecting Medical Marijuana Businesses
In addition to these external, market factors, cannabis businesses in the Commonwealth also have to cope with some sizable internal costs when getting their businesses up and running and operating them in the long term.
While the majority of Virginians support the legalization of cannabis in the state, there could still be a shift in the political tide. With elections coming up in November that could unseat Governor Northam and shift control of the legislature back to Republicans, some cannabis advocates are concerned that political opinion could turn against cannabis, as it did recently in Mississippi.
For the time being, polls indicate this will not be the case. In a purplish state such as Virginia, however, any cannabis business needs to consider this potential risk. Risks, unfortunately, often translate into higher prices at the consumer level. As the Virginia political landscape stabilizes and as the retail sales date for adult-use cannabis in 2024 gets closer, prices should begin to settle in this respect, as well.
Tax Burdens for Cannabis Retailers
An additional internal operating cost for cannabis retailers in Virginia comes in the form of a federal tax burden. Whereas many business receive tax breaks at the federal level, cannabis companies do not. This means that Virginia cannabis dispensaries have their business expenses taxed as income and don’t enjoy some of the corporate benefits that can help US businesses thrive.
Again, this transfers down the production chain to the ticket price on the product for a consumer. This burden won’t change in the near future for Virginia cannabis dispensaries, unfortunately, since there is little support currently for the federal legalization of cannabis. This may well change in the long term, however.
Banking and Insurance Issues with Cannabis Companies
Virginia cannabis retailers can also have a difficult time with banks and insurers. Cannabis companies in Virginia feel another pinch on this issue at the federal level once again. Federal programs, for one, provide no recourse for cannabis companies that may incur significant losses. Insurance is problematic, as well.
Insurance companies for a cannabis business in Virginia are hard to find, for one, primarily because of the lack of federal support for the industry. This goes for banks, too, which hesitate to partner with cannabis businesses or provide them with loans. If a cannabis business is able to secure a loan from a bank, it may well come with high fees that then— once again— transfer down to the consumer.
Finding Balance in Supply
Finally, any business starting out in a new industry has an important question to consider: How much demand is there for a product in a burgeoning market? Virginia growers are in the precarious position right now of trying to figure out just how much demand there is in the state for their product.
Whereas an orange grower in Florida has decades of statistics and data to work with, cannabis growers are working a bit in the dark. Overproducing can lead to significant losses. Even if supply matches demand, businesses in the Commonwealth may have a hard time pushing their product out to consumers as the industry gets up and running.
The future is definitely bright on this front, however. More and more Virginians now understand the benefits of medical marijuana. What’s more, the word is out on the outsized benefits that come from going the legal route with medical marijuana, as opposed to taking the illegal black market route. The demand for medical marijuana will only increase, giving suppliers more confidence in making production decisions that benefit consumers in the end.
Lower Prices are Coming, So Get Your VA Marijuana Card Now!
Prices are higher in Virginia for now, but they can and will come down in the future. In the meantime, getting your medical marijuana card is the best and safest way to access quality medical marijuana products.
Schedule an appointment with an online medical marijuana doctor today to start gaining access to safe, legal cannabis products, including tinctures, flower, concentrates and more. You’ll be doing your part, too, to grow the market and start bringing those prices down! This price hike is frustrating, but only temporary as the industry continues to stabilize and grow. The quality, potent products you can get with a medical marijuana card are well worth it in the meantime.
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At Virginia Marijuana Card, our mission is helping everyone achieve wellness safely and conveniently through increased access to MMJ. Our focus on education, inclusion, and acceptance will reduce the stigma for our patients by providing equal access to timely information and compassionate care.
Call us at (888) 633-5808, or simply book a medical marijuana evaluation to start getting relief you can trust today!
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