Yet again, states that are dragging behind when it comes to making medicinal and recreational marijuana accessible, have caused neighboring states to flourish.
While medicinal marijuana has been legal in the state of Pennsylvania since 2018, nearly 3% of the state population cannot access affordable medical products, leaving patients desperate.
Market Boom
While Pennsylvania lawmakers may be sleeping on an economic opportunity, the Curaleaf business in Bellmawr, New Jersey, is thriving thanks to the lack of accessibility and affordability in Pennsylvania. According to early estimates from Mike Regan of MJ Research Co., the New Jersey store is selling around 11 packs of 3.5 grams each minute during operating hours. Curaleaf is just a short drive over the NJ border.
Visitors are prohibited from transporting cannabis over state lines under federal and state law. However, this has not appeared to deter many Pennsylvanians from traveling down the road to buy legal, lab-tested medical essentials.
According to an NBC-WGAL report, “a number of vehicles in Curaleaf’s parking lot had out-of-state license plates, including tags from The Keystone State.”
Some Pennsylvania patients are finding themselves attracted to the recreational prices in NJ, which range from $45 to $60 for 3.5 grams, rather than the $60 average they see in their home state.
Low Prices, High Profit
Time and time again, we’re seeing states miss out on economic growth opportunities due to strict lawmaking, and overly priced products. Representatives from Curaleaf said in an earnings call that the Bellmawr store is on track to bring in $100 million in revenue this year.
In legalizing the recreational use of marijuana and promoting its mainstream use, states such as New Jersey can afford to make prices more accessible, as they are catering to a much wider audience. The state is presently home to 130,000 medical marijuana patients. Conversely, the state’s Cannabis Regulatory Commission estimates the number of recreational users to be at around 800,000.
Price fixing is also a big concern among huge corporations in Pennsylvania’s medicinal cannabis market, according to John Collins, the recently retired head of Pennsylvania’s Office of Medical Marijuana. The State Health Department recently requested a probe into allegations of price gouging in the business in March to no avail, while others have remarked that declining wholesale prices have not been being reflected on dispensary menus.
According to Leafly, some patients are paying upwards of $1500 a month to purchase their cannabis medication, and with the average cost to rent an apartment being nearly $1200 a month, its safe to say not all Americans have the luxury to afford both a roof over their heads and their MMJ.
First Mover Advantage
First Mover Advantage is defined by the Corporate Finance Institute as “the advantage gained by a company that first introduces a product or service to the market. The first-mover advantage enables a company to establish strong brand recognition and product/service loyalty before other entrants to the market.”
Curaleaf is one of the first and longest-standing fully vertical cannabis companies that has been catering to medical patients in the state of New Jersey. Curaleaf’s Bellmawr site was one of seven medical providers (known as alternative treatment centers) granted authorization to open portions of their existing dispensaries to recreational customers in April.
This has allowed Curaleaf to establish itself as the industry standard, and garner a loyal clientele which contributes to overall cash flow and profit.
Though New Jersey’s cannabis market may be booming, continued price gouges and limits on accessibility are sending Pennsylvania into a stark lack of profitability. Though lowered cannabis prices may seem counterintuitive, they in fact contribute to a wider reach and economic gain for MMJ distributors.
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