10 Companies That Could Benefit From New York's Medical Marijuana Market

As the U.S. battles an opioid crisis and the federal government's action is mostly limited to talk, progress can be found on a local level.

New York is attempting to counteract the opioid epidemic by making marijuana available as an alternative.

Medical marijuana is legal in New York and has been since 2014, but only in 2016 was marijuana accepted as a therapeutic option for chronic pain. It's a significant milestone, since chronic pain is a major driver for opioid prescriptions.

The number of medical marijuana patients increased by 128 percent, or 37,000 people, to 65,446 patients in the last year, Marijuana Business Daily said. Last month, the state's Department of Health added opioid replacement as a qualifying condition for a medical marijuana prescription, which should only drive the number of patients higher.

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Medical Marijuana Has Room to Grow in NYC

MJBiz Daily estimates there could be as many as 3.8 million New Yorkers who would be allowed to use medical marijuana as an opioid alternative. The idea that cannabis could help with easing the opioid crisis is backed by scientific research.

Earlier this year, two studies published in JAMA Internal Medicine showed that in states where medical marijuana was legalized, the number of opioid prescriptions declined, with one study pointing out that both medical and recreational marijuana legalization led to a fall in opioid prescriptions.

New York Gov. Andrew Cuomo recently announced the appointment of a workgroup to draft legislation that would legalize recreational marijuana. A Department of Health-led study showed that a regulated marijuana market in New York has more positives than negatives, according to a statement from Cuomo's office.

MMJ Patient Growth A Positive Biz Catalyst

The ground that medical marijuana is slowly gaining in New York is good news for marijuana companies with an established presence there.

Six companies produce and dispense marijuana in New York, according to the state's health department. Four others have established production facilities but have not yet opened dispensaries.

The companies currently licensed to produce and sell marijuana in New York are:

• Columbia Care NY
• Etain
• Medmen Enterprises Inc MMNFF
• PalliaTech NY
• PharmaCann
• Vireo Health of New York
• Citiva Medical.* Owned by iAnthus Capital Holdings Inc ITHUF. 
• Fiorello Pharmaceuticals*
• NYCANNA*
• Valley Agriceuticals* (a subsidiary of Gloucester Street Capital)

*Dispensaries coming soon

While these companies stand to benefit from more patients adopting marijuana in lieu of opioids, the increase in the number of patients on its own could drive even more growth, and here's why. 

Prices have limited the size of New York's medical marijuana market so far. An ounce of high-quality marijuana runs about $320  in New York, according to priceofweed.com.

Since medical marijuana isn't covered by health insurers, not every patient can afford it. Patients spend between $150 and $400 per month on marijuana, according to Etain.

"The price of MMJ in New York should decline, however, as officials recently doubled the number of licensed MMJ producers in the state from five to 10. Once these come online, it's expected that prices will come down to a more reasonable level," Eli McVey, research editor at MJBizDaily, told Benzinga.

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Lower Costs Are Just Part Of The Solution

Marijuana is still illegal on a federal level, ruling out transport across state lines.

Instead, companies that want to distribute marijuana in a state must set up production facilities there. As more patients sign up for medical marijuana and competition increases with more companies obtaining licenses, this could require companies to expand their capacity, lowering costs and prices for patients.

Aside from high prices, other factors exist that can deter patients from signing up for the medical marijuana program. Under the current laws, each company is allowed up to four dispensaries; there are just 22 dispensaries in New York, with 18 more expected in the near future.

It's unclear whether more companies will enter the market in addition to the 10 that are already licensed. The state accepted applications back in 2015, and even though it received 43 applications, it registered only five companies, with five more added two years later.

To address this issue, most companies that operate in the state offer home deliveries, but their capacity may not suffice.

As MJBizDaily points out, there's less than one dispensary per 1 million residents in New York, while Colorado has 90.

Photo courtesy of MedMen.