When Hawaii’s two operational medical marijuana dispensaries were forced to close just days after opening, a laboratory bottleneck was blamed for a supply disruption.
But participants in the fledgling MMJ program said the state’s only functioning lab isn’t at fault.
Instead, they pointed to a number of other factors for their problems, including:
- A surge of patients who have waited years for the program.
- Too few dispensaries.
- Restrictions on products labs can test.
- A lack of preparation.
Maui Grown Therapies and Oahu’s Aloha Green opened for business a day apart last week.
By Saturday, both dispensaries were out of flower – the only form of MMJ that’s been approved for lab testing – and didn’t open for business Monday and Tuesday.
However, Maui Grown and Aloha Green are expected to reopen Wednesday after they receive a resupply of medical marijuana from the state’s only functioning testing facility, Steep Hill Hawaii.
Hawaii’s medical marijuana program has some 18,000 registered patients, many of whom have been waiting since the registry began in 2000 with an MMJ caregiver program.
“There is a fair amount of pent-up demand after waiting 15 years for a dispensary to open up here,” said Christopher Cole, director of product management for Maui Grown.
And the situation could worsen: State officials expect the pool to grow by up to 50% in a year.
Dispensary shortage
When the state legislature approved a full-fledged MMJ program in 2015, it established eight vertically integrated MMJ businesses.
So, although Aloha Green COO Tai Cheng foresaw the industry rollout taking some time, he didn’t anticipate being one of two business up and running at the start.
“I don’t think anyone expected to be… selling lab-tested cannabis by themselves,” he said.
Some might see that as good problem to have. But “it’s not that great from an operational perspective,” Cheng said, “because it really pushes the staff and pushes the growers.”
It wasn’t only the demand that overwhelmed the dispensaries, however.
No manufactured products
The provisional license issued to Steep Hill allows only flower to be tested, leaving the two dispensaries sitting on thousands of units of manufactured products that can’t be sold until they’re tested.
“We had been planning for the last several months … to bring to market not just dried flower but a full range of derivative products – tinctures, lozenges, concentrates, everything that’s allowed basically under Hawaii law,” Maui Grown’s Cole said.
Before opening its doors, Cole added, Maui Grown conducted a survey of patients’ product preferences and found that roughly 40% favored manufactured products – another reason the dispensary was surprised by the initial demand for flower.
Cole emphasized the supply problem wasn’t Steep Hill’s fault.
“It’s the fact that we can’t submit a large volume of derivatives for final compliance testing,” he added.
According to Steep Hill Hawaii CEO Dana Ciccone, the lab’s goal is to return testing results to the dispensaries within five days of sampling.
“At this time, Steep Hill Hawaii has no backlog of samples and continues to work with both dispensaries to ensure patients can continue to buy their medicine,” Ciccone wrote in an email.
The Maui Grown experience
Maui Grown opened Aug. 8 and sold MMJ only by appointment.
The dispensary gave priority to patients who went through a preopening intake process, Cole said, to ensure a comfortable experience without long lines.
Maui Grown purchases were evenly divided between THC strains possessing little CBD and strains that were a mix of THC and CBD.
Maui Grown averaged more than 100 patients each day before running out of lab-tested flower and having to close Saturday, he added.
While Cole hesitated to release sales volume or average purchase amount, he said patients preferred to purchase the larger size among the different product increments – “as you might expect when the patients are feeling some insecurity about supply.”
The Aloha Green experience
Honolulu’s Aloha Green opened Aug. 9, and Cheng said the dispensary averaged about 200 patients over three days before closing.
Cheng said Aloha Green customers were most interested in 3.5-gram packages of flower.
The dispensary tried to offer strains that weren’t common on Oahu, particularly on the black market. The company also grew strains that are better suited to the island climate.
Cheng didn’t notice many people stocking up by purchasing their 4-ounce limit.
“Our pricing is higher than the black market, so that stopped people from doing that,” he said.
Aloha Green hasn’t yet analyzed the numbers to determine how much each patient spent on average, Cheng added.
‘No meat’
At least one industry watcher wasn’t impressed by how the first week of sales went.
“We saw this happening,” said Chris Garth, executive director of the Hawaii Dispensary Alliance. “This is another case of a select group looking to be the novelty of the first to open.”
He believes the dispensaries were “short-selling the patients” by not having adequate supplies.
“If you don’t have enough flower for the foreseeable future … then you shouldn’t open,” Garth said. “That’s like going to a soft opening for a restaurant and all they have is buns for the hamburgers. No meat. No filler.”
Garth believes Hawaii’s health department is working diligently to get other labs operational and to get Steep Hill certified to test manufactured products.
Like Cheng, he’s hopeful the other dispensaries will open soon.
“We need more players,” Garth said. “We need more licensees.”
Bigger patient pool
That’s a legitimate concern, considering the health department anticipates upwards of a 50% increase in patients in the program’s first year, Hawaii News Now reported.
Through June 2017, Hawaii’s patient distribution by island was:
- Big Island: 6,694
- Oahu: 5,129
- Maui: 3,992
- Kauai: 1,776
Cheng anticipates patient numbers “to increase quite dramatically” as the MMJ program matures.
Plus, he added, “once people find out how superior the product is in its quality (to the black market), I think you’ll see more people start to register.”
Bart Schaneman can be reached at barts@mjbizdaily.com
