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What Drove Oklahoma Cannabis Prices So Low?

The Oklahoma Medical Marijuana Authority (OMMA) published September 2022 tax collections, allowing us to extrapolate sales made in August 2022 in the state’s medical cannabis program. August 2022 sales, at $59.7 million, were down 8.4% from July 2022 sales of $65.1 million and down 22.7% from August 2021 sales of $77.2 million.



Oklahoma spot prices have undergone an epic shellacking since late summer 2020, losing 59% from the 2020 high of $2,229 per pound to the 2022 low at $915. Price losses of this magnitude are typically never fully reversed because they represent fundamental changes in the underlying market; in this instance, the rapid issuance of cultivation licenses.

In December 2021, the license frenzy reached its pinnacle with over 9,400 cultivation licenses, 2,519 dispensaries, and 1,712 processors for 384,500 patients; that is one cultivator for every 41 medical marijuana patients, one dispensary for every 153 patients, and one processor for every 224 patients. At the very least, this many licenses virtually guarantees a huge oversupply of cannabis and brutally competitive retail discounting, even considering not all licensees were operational.


In August 2022 there were 382,143 registered patients in the state’s medical marijuana program, down 1,220 (-0.3%) from July 2022’s 383,363 registered patients, but up just over 1% from August 2021’s 378,312 registered patients.

As of the end of August 2022, there were 2,374 dispensaries with active licenses, up 1.7% from 2,335 at the end of July 2022 and down just four from 2,378 recorded in August 2021.

The number of licensed growers at the end of August 2022 was 7,285, down 61 (-0.8%) from the month prior and down 1,345 (-15.6%) from August 2021’s 8,630 licensed growers.

OMMA reports there were 11,075 active cannabis business licenses in the state in August 2022, although regulators cannot say how many of those licenses are operational.


While the number of cultivation licenses has been reduced year-on-year, the reality remains that there are still 52 patients for every active cultivator license. The dispensary ratio is 160 patients for every license. In fact, if the Oklahoma Bureau of Narcotics is correct and over 1,000 cultivation licenses are involved in an illegal licensing scheme, the removal of those licenses would still leave the state with too many cultivators for the number of registered patients.

Recent news reports have focused on the “ghost owner” lawyers; attorneys accused of paying off their firm’s employees and others to claim cannabis license ownership, when the licenses were actually owned by an out of state or foreign entity or individual that does not meet state residency requirements (75% of any cannabis license must be owned by an Oklahoma resident). News on 6 reports the Oklahoma Bureau of Narcotics spokesperson Mark Woodward said, “almost 25% of the farms in Oklahoma are potentially operating under the same fraudulent business scheme.” He also noted “well over a 1,000 if not close to 2,000” may be involved in the ghost ownership arrangements.


Presuming enforcement is coming for such operations, the impact on supply in Oklahoma’s medical cannabis market remains uncertain. Licensed cultivators involved in “ghost ownership” schemes may have been selling some or all of their production into the illicit market, which would lessen the impact on supply within the licensed medical system if those growers are shut down.


Oklahomans will vote in March 2023 on whether adult use cannabis should be legal in the state. If the measure passes, it might help alleviate at least some of the oversupply in cannabis and cannabis licenses.


repost from https://www.cannabisbenchmarks.com/?s=oklahoma

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