OKLAHOMA CITY — Medical marijuana dispensaries, recently so common in Oklahoma that they’ve sometimes occupied opposite corners of the same intersection, struggled in many cases to survive through the last fiscal year.
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Many didn’t.
According to the most recent annual report of the Oklahoma Medical Marijuana Authority, the number of licensed dispensaries dropped 27% from 2,852 as of fiscal year 2023 to 2,051 in FY 2024.
Other related businesses buckled, as well, as the medical marijuana industry experienced a continuation of a trend of painful “rightsizing” that many believe hasn’t ended yet.
The annual report, released in the past week, documents trends from summer 2023 through summer 2024. It reflects how the industry, which experienced a rush of entrants following passage in 2018 of a state question legalizing medical marijuana use, contracted in FY 2024.
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The total number of commercially licensed businesses — including growers, medical marijuana product processors and dispensaries — numbered 11,330 in July 2023. According to the report, that number steadily declined through most of the year before beginning to level off in April and then settling at 6,937 total commercial licensed businesses recorded in June 2024.
Licensed marijuana growers sustained the largest losses. They numbered 6,497 in July 2023; by the following June the number dropped to 3,645.
OMMA Executive Director Adria Berry and others previously said an oversupply of marijuana — both legally and illegally grown — would likely make it increasingly difficult for some businesses to survive.
“What we are seeing is the free market doing exactly what it’s intended to do — balancing out supply with demand,” the OMMA said in a statement Friday.
The number of licensed medical marijuana product processors declined 39% from 1,792 to 1,092.
The number of medical marijuana patients in Oklahoma dipped during the same time period, according to the report, from 353,437 to 344,556.
Mike Ervin, the director of the Oklahoma Cannabis Industry Association, said the industry rightsizing wasn’t unexpected, but it has been difficult nevertheless, especially for those who invested early in dispensaries and other businesses only to see them close after a few years.
“I think this industry is no different than any other. When you start out, there are early entrants, things expand fairly rapidly and then you see a multitude of competitors enter at some point and the market becomes saturated,” he said.
He described what has happened in the past few years as a “shakeout” phase that will end only after more of an equilibrium has been reached between business supply and consumer demand.
He noted that about 84 business licensees exited the market each week throughout FY 2024, and yet nearly 7,000 business licenses remain on the OMMA’s books.
“We feel that equilibrium can only be reached when those numbers are much lower,” Ervin said. “I think we’re going to see many, many people in the industry exit in the next 12 months.”
Probably the biggest factor contributing to the turmoil has been the oversupply of marijuana, which Ervin said has put pressure on growers, processors and others to turn out products at cheaper and cheaper prices. Most marijuana that is illegally grown in Oklahoma is exported to markets out of state, but some remains behind and contributes to the oversupply problem.
“We are extremely happy with the OMMA and OBN (Oklahoma Bureau of Narcotics) in their efforts to reduce the amount selling on the illegal market,” he said.
However, he said that as consumers become more accustomed to declining prices, their expectations will put even more pressure on businesses and could accelerate the business closings.
“(The industry) will suffer for a while yet, and those that have the business acumen — the ability to be more vertically integrated, who have cash flow and are able to demand price reductions based on volume — those folks are going to be able to survive,” he said.
While numbers of dispensaries and other businesses may have declined significantly in FY 2024, tax revenues related to medical marijuana sales remained fairly consistent. According to the OMMA report, the state collected slightly more than $51 million in excise taxes on medical marijuana sales through the course of the year, with monthly averages hovering in the range of $4.3 million to $4.4 million.
State and local sales taxes related to medical marijuana purchases totaled about $65.7 million, with monthly averages remaining fairly consistent in the range of $5.6 million.
“}]] A new report reflects how the industry, which experienced a rush of entrants following approval of State Question 788 in 2018, contracted in fiscal year 2024. Read More
