Medical marijuana prices in Arizona have finally started to drop, after the recent failure of Proposition 205 to legalize marijuana for all adult use, including recreational, and a simultaneous proliferation of medical cannabis growers and dispensaries throughout the state. If Proposition 205 had passed, the number of prospective consumers for the marijuana industry would presumably skyrocket, maintaining high prices as long as demand outpaced production and availability. But, in the face of the proposition’s defeat, the recent combination of increased competition, cultivation and consolidation of dispensary license-holders has finally started driving medical marijuana prices down in the state.
The CEO of Harvest Dispensaries, Steve White, told reporters his business is already seeing competition increase and a resulting decrease in prices. These observations were echoed by co-owner of The Giving Tree Wellness Center, Lilach Power, who’s seen a consolidation of licenses and an increase of dispensaries opening in their area.
The East Valley Tribune reported in January of 2017 that sales of medical marijuana in the state reached $367 million in 2016. With this trajectory, according to the data compiled by New Frontier Data, medical marijuana sales can reach over $680 million by the year 2020. New Frontier Data further concluded that if Proposition 205 had passed, making marijuana legal for adult use in the state, the medical and recreational marijuana markets would surpass a combined $1.1 billion by 2020.
The outcome of this change in the marketplace, explains founder and CEO of New Frontier, Giadha DeCarcer, is that dispensaries will now have to prepare themselves to adapt to lower prices and higher competition. The Giving Tree Wellness Center is already taking action in this direction by building a new cultivation facility in the northern part of the state. The Arcview Market Research Group’s CEO Troy Dayton says the annual growth rate in the medical cannabis industry in Arizona is a compounded 17%, while the rate if Proposition 205 had passed would be closer to double that.
Steve White of Harvest Dispensaries, meanwhile, believes that in four years time, once Arizonans see the success of recreational marijuana legalization in other states, particularly insofar as building vastly increased tax revenues, they too will vote to legalize marijuana across the board in their own state. This would serve to increase the market demand for marijuana dramatically, which would, in turn, stabilize prices. Power concurs with this assessment, claiming that, come 2020, the next effort to legalize marijuana for adult use in the state will pass.