A Snapshot Of America's Medical Marijuana Markets: Washington

Washington state was an early adopter of medical cannabis in 1998 and adult-use legislation in 2012.

Since the passage of the latter, Washington's medical market has seen a steady decline and has just over 44,500 patients in a state of 7.3 million, according to state Department of Health data from Jan. 29. 

Washington State carries a nation-high 37% excise tax on both medical and adult use products, as well as high operating costs for businesses, in a market that some lawmakers want to overhaul.

A Dead Medical Market?

Any such legislative overhaul may be too late for the medical market. None of the state's 187 licensed standalone dispensaries exclusively serve medical patients, according to research from Arcview Market Research and BDS Analytics.

Despite the medical market taking a substantial blow, Washington is a lucrative cannabis market.

In 2018, combined sales reached $1 billion, with the figure forecasted to touch $1.3 billion by 2024, according to the Arcview and BDS Analytics report.

Jeremy Kaufman, part owner of the retail-medical dispensary brand Bakeree in Seattle, told Benzinga that his stores struggle with "horribly crafted legislation."

The state has a slow regulatory process and misallocated time and resouces, he said. 

"The amount of time and resources that are roped into frivolous traceability checks and over packaging is almost incalculable," Kaufman said. 

In July 2019, Washington's statewide traceability system experienced a four-day "breakdown," resulting in "thousands" of losses for the sector.

The store owner said he empathizes with patients, adding that they are in the same place they were before legalization.

"There is much more to be done," he said.

Washington is experiencing a decline similar in patients to other merged adult use and medical markets.

While the standalone medical market fades away, Kaufman said he debates the legalization that killed the market. The state's medical community still supports one another, as it did pre-legalization, he said. 

"What legalization in Washington really did is just force consumers in that demographic to continue servicing their needs with the infrastructure that was there pre-legalization." 

A Reshaped Market

State lawmakers have heard the concerns about the merged market. In the past year, the legislative activity indicates that significant changes could be made that affect several aspects of the market.

In August 2019, the state legislature considered an array of rule changes. The proposals included a pathway to medical cannabis home deliveries, increasing minority ownership and allowing small operations to increase operational capacity.

The efforts followed reform in spring 2019 that saw lawmakers pass several bills during the final days of the legislative session. Regulatory change included updates to compliance and enforcement licensee provisions, reducing criminal charges for particular offenses and establishing a task force to develop lab standards across the state.

In March, the state passed legislation that aims to improve industry diversity. The bill passed after years of debate surrounding out-of-state investors shifted to in-state inclusion.

On the medical front, Washington faces its ebbs and flows in the marketplace as well. Despite its longstanding market, doctors reportedly remain reluctant to discuss medical cannabis. While the issue persists, lab studies indicate medical research could help bridge gaps.

In May 2019, Washington State University's research team partnered with the Tacoma-based Puyallup tribe. The research aims to develop standards for evaluating treatment agendas at natural healing clinics.

Ongoing Market Reformation Efforts

Washington State continues to assess and revise its merged marketplace. This year began with an effort to essentially ban concentrates via a 10% THC potency cap. The measure was tabled not long after its introduction.

The subject of home delivery recently picked up steam once again as well. Backed by the COVID-19 pandemic, support for legalizing home delivery could be the next subject the state assesses and possibly revises.

Related Links:

RegTalk: Washington State To Revise Marijuana Product Label Rules, Favor Education Over Enforcement

Washington To Diversify Marijuana Industry Through Social Equity