An Inside Look at the University of Washington’s Cannabis Report

Washington State cannabisThe Washington State Liquor and Cannabis Board (LCB) recently released a report on the canopy space required to provide cannabis to the state’s medical patients. The University of Washington School of Law’s Cannabis Law and Policy Project (CLPP) compiled the report. The report was authored by Professor Sean O’Connor and the project’s director, Sam Mendez. I served as a contributing author as a CLPP member. Data was collected mainly by calling Washington dispensaries. Some highlights of the study are as follows:

Data was collected mainly by questioning Washington dispensaries about the amount of cannabis they sold or donated and also how they obtained cannabis. Some highlights of the study are as follows:

  • There were an estimated 273 medical marijuana dispensaries in Washington in January 2016
  • Dispensaries sell an average of 9.55 pounds of marijuana flower monthly
  • The average price of marijuana per gram sold by these dispensaries is less than $10
  • Marijuana flower comprises 60 percent of sales at dispensaries, followed by concentrates (22 percent) and edibles (18 percent)
  • The potential market value based on 10 million square feet of canopy is more than $8 billion

The study estimates that between 1.7 million and 2 million square feet of canopy is needed to supply Washington State’s existing medical cannabis market. The LCB currently allows for 10 million square feet of canopy space, including recreational.

The report stated that the existing 10 million square feet of canopy space should be sufficient for two reasons. First, based on an early report by BOTEC, the Washington State marijuana market is roughly one-third medical, one-third recreational, and one-third illicit. If each market requires up to 2 million in canopy space, the entire market would be sufficiently supplied with 6 million square feet of canopy, which is less than the 10 million allocated. Second, based on a United Nations study, 10 million square feet of cannabis would yield roughly $8 billion dollars (assuming a gram sells for $8). Total retail recreational sales in Washington for 2015 were around $323 million.It is unlikely that the medical marijuana market will require an increase in sales from $323 million to $8 billion.

As someone who contributed to this study, here are some of what I consider to be its key points:

This is a study, not a binding mandate on the LCB. The LCB contacted CLPP to study canopy space. It did not (and could not) defer actual rulemaking authority to the CLPP. This report does not mean the LCB will or will not expand canopy space. It is simply a report that collected data about Washington’s medical cannabis industry and then analyzed that data to get an idea of the required canopy space.

The report is an estimate. The report states the following:

It should be noted that the figures in this Report are intended as a broad estimate, and the data is hampered by the lightly regulated nature of the current MMJ market. Surveying is by nature a science of estimation. It is difficult, if not impossible, to know exactly how many dispensaries there are in Washington State, or to verify the numbers provided to us by dispensaries. Nearly all of the calculations in this Report require some measure of estimation, so we recommend that our conclusion not be seen as a hard conclusion but rather as a broad estimate.

I recently spoke to Leafly about the report and stated that it was a mere snapshot of the market as it operated at the beginning of 2016. The unregulated nature of Washington’s medical cannabis industry makes it impossible to generate “hard” numbers. This study provides an estimate for the LCB, not a definitive answer.

This study does not address the need for high CBD cannabis. Under RCW § 69.50.345 (1)(b), the LCB was required to expand canopy space for producers as part of the Cannabis Patient Protection Act:

Increase the percentage of production space for those marijuana producers who intend to grow plants for marijuana retailers holding medical marijuana endorsements if the marijuana producer designates the increased production space to plants determined [. . .]  to be of a THC concentration, CBD concentration, or THC to CBD ratio appropriate for marijuana concentrates, useable marijuana, or marijuana-infused products to be sold to qualifying patients. If current marijuana producers do not use all the increased production space, the state liquor and cannabis board may reopen the license period for new marijuana producer license applicants but only to those marijuana producers who agree to grow plants for marijuana retailers holding medical marijuana endorsements.”

Those ratios of CBD are to be determined by the Washington State Department of Health. This process is to continue into 2017 and will rely on information from the patient database that Washington patients can elect to submit information to. This report did not address the need for CBD products. The LCB will have to take up that issue using some other means of research.

Next steps. The LCB and the public are free to review this study and draw conclusions about resolving the medical cannabis issue. We encourage Washington cannabis industry stakeholders to contact the LCB with their thoughts on how the agency can best regulate medical cannabis.