Medical Cannabis Has $100,000 Opening; Gummies and Oils on Way

Medical Cannabis Has $100,000 Opening; Gummies and Oils on Way
Robert Lercher of Bold Team stands amid 1,600 marijuana plants growing at the firm's cultivation center in Cotton Plant. Some of its second crop is for edible products and oils, which could be available next week. (Kerry Prichard)

Legal marijuana sales finally arrived in Arkansas in a $100,000 opening weekend at the state's first two medical cannabis dispensaries, which had together sold about 15 pounds' worth by Monday night.

Lines of customers formed at Doctors Orders RX and Green Springs Medical, both in Hot Springs, which opened for business over the weekend. Hundreds of the state's 12,000 patients with medical marijuana cards bought dried cannabis buds for $15 a gram. Fifteen pounds equals about 6,800 grams, with a retail value of about $102,000.

"Sales were pretty good, so good that every time I'd call over there, they'd say, 'Bailey, dang it, we're busy. Please let us work, we don't have time to give reports to you,'" said Bailey Moll of JPJ Consulting of Little Rock, a spokesman for Doctors Orders RX, the first dispensary to open, with a few customers on Friday. "I think between both dispensaries they sold over 15 pounds."

The state's first cannabis edibles and oils could head for dispensary shelves late next week, according to Bold Team LLC of Cotton Plant, the only cultivation site in the state to have produced a finished crop.

The state Department of Finance & Administration reported that by 1 p.m. Monday, hours before the dispensaries closed, Doctors Orders Rx had sold 10.85 pounds in 868 transactions. Green Springs, which opened Sunday, reported 269 transactions involving 2.93 pounds of the drug, which was legalized by popular vote in November 2016 and has been widely anticipated in the two and a half years since.

"Each individual transaction represents the purchase of one strain," said state spokesman Scott Hardin. "If someone purchases three strains, that is three transactions."

(Late Tuesday, Hardin updated sales figures. As of 3 p.m. Tuesday, the two dispensaries had sold more than 26 pounds, with Doctors Orders reporting 15.77 pounds sold in 1,280 transactions and Green Springs reporting 10.57 pounds sold in 978 transactions.)

Some patients said they were deterred by the price, which at $420 an ounce is higher than in just about any other state with legal cannabis sales, according to a November 2018 survey by Statistica. The U.S. average in that study was $320 per ounce, and the highest state average was $354 in Illinois. The District of Columbia had by far the highest price on high-quality marijuana, $600 an ounce.

Sales in Hot Springs were hampered not by product quantity, but rather by time, Moll said. 

"It's not even a simple supply-and-demand issue. It's a throughput kind of issue. Just like when you go to a doctor the first time and they give you a clipboard and 7,000 pieces of paper, that's what's happening when a patient walks into a dispensary now. Everyone's a first-time person, there's a ton of paperwork, and unfortunately the paperwork they filled out to get a card is not communicating with what you have to do to buy it when you get to a dispensary," he said. "So it's kind of like you have to reinvent the wheel."

The average transaction at Doctors Orders was $90 on Saturday, $77 on Sunday and $88 on Monday, according to state records. Average sales at Green Springs were $70 on Sunday and $73 on Monday. Hardin said the initial marijuana crop delivered to the dispensaries was about 200 pounds' worth.

David Couch, the Little Rock lawyer who wrote the medical marijuana amendment passed by voters, called the initial pricing "probably a little high, and higher than it probably will be once more dispensaries open."

He said in a telephone interview with Arkansas Business that if he were on the Arkansas Medical Marijuana Commission, he would "authorize the three additional grow facilities allowed by the law," giving the state eight grow sites. Overall, three of the current five cultivation sites are growing cannabis, with a harvest expected at Natural State Medicinals in White Hall (Jefferson County) "in the near future," Hardin said. Osage Creek of Berryville "will follow later this summer."

The other two licensed cultivation sites, Delta Medical Cannabis and Natural State Wellness Enterprises, both in Newport, are still building their facilities.

Most of the state's 32 licensed dispensaries will also grow limited amounts of cannabis once they're in operation, Hardin said. This will provide "the ability to maintain 50 plants on site at any given time." In Zone 1 in northwest Arkansas, all four licensed dispensaries have authorization to grow, he added. "Through all of this, we are hopeful there will be adequate supply for patients throughout the state," Hardin said.

Bold Team LLC of Cotton Plant (Woodruff County) provided the first legal cannabis crop to the dispensaries, and Director of Customer Relations Robert Lercher told Arkansas Business that the $6 million growing operation has taken in its second harvest. 

"It's been trimmed and is currently curing," he said.

Most of that crop will go for testing at Steep Hill Arkansas, a Little Rock quality-testing company led by CEO Brandon Thornton. 

"Brandon has been going out of his way to get the test back to us ASAP, so we expect to have that product available by the end of this week for dispensaries," Lercher said. 

Bold Team has allocated part of the second crop for the production of edible products and vaping oils, Lercher said. "Those products, when complete, will have to be tested as well. I expect to have them ready by early next week."

The state does not have oversight responsibilities for cannabis pricing, Hardin said. 

"Amendment 98 did not provide any authority or oversight to either the Medical Marijuana Commission or ABC [Alcoholic Beverage Control, the state's enforcement unit for medical cannabis] regarding pricing," he said. "Price will be determined totally by the market."

He said prices are likely to vary across the state as dispensaries compete for customers.

Couch noted that marijuana sales in Oklahoma, which authorized medical cannabis long after Arkansas, reported $18 million in sales in April, with the state reaping more than $1.2 million last month from a 7% marijuana excise tax in addition to state and local sales taxes collected.

Arkansas will reap its regular 6.5% sales tax on marijuana, and charge a 4% excise tax.

Hardin said the state does not track wholesale pricing in the medical cannabis program, focusing instead on sales to customers.

Each dispensary must maintain seed-to-sale software tracking individual purchases, a system compatible with the system the state is using, called BioTrack. 

"While a significant number of dispensaries chose Biotrack, others chose companies such as MJ Freeway," Hardin said. "As the information from each transaction is automatically submitted to the state system, the Health Department and ABC may monitor this to ensure compliance. From confirming patient purchases do not exceed 2.5 ounces every 14 days to monitoring the total number of transactions for each dispensary, the software plays a key role in Arkansas' medical marijuana industry."

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