June 18, 2024

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Medical marijuana sales sizzle in Pennsylvania, and the M&A market has been busy | Business

3 min read

James Thomas’ hips began to bother him three or four years after his joint replacement surgery. He turned to medical marijuana and is still testing the right formulation.

“I haven’t found the right marijuana yet,” said the 69-year-old retired heavy machinery operator from Wilkinsburg. He tried a spray and smoked flowers, a consumer preference.

“Let’s just say it was kind of mild and the spray was about the same,” he said. “It made me a lot nicer, smiled, joked, and maybe even talked more than I usually do. It always lifted me up. “

It also relieved his hip pain, he said.

Thanks to consumers like Thomas and the prospect of legalized recreational marijuana in the state, Pennsylvania’s cannabis industry is on the rise. The market has totaled $ 3.4 billion in sales since 2018, according to the state’s Medical Marijuana Advisory Board. Pharmacies made $ 2 billion in those sales.

Since marijuana was legalized for the treatment of serious illnesses in Pennsylvania in 2016, 633,557 patients and caregivers have enrolled because a doctor’s prescription is required to purchase.

And if recreational marijuana is legalized in Pennsylvania, sales could quickly more than double if the Illinois experience is a benchmark.

Cantor Fitzgerald analyst Pablo Zuanic doesn’t think this will happen until the first quarter of 2025 as the state’s Republican-controlled legislation hasn’t shown much interest. But legalizing recreational use in nearby states – New Jersey and possibly Maryland – could force the hand of lawmakers, Zuanic wrote to investors.

The bad news is, without legal recreational use, the growing number of pharmacies in Pennsylvania – 131 are now open – will dampen overall sales, Zuanic wrote. The silver lining for consumers to have more stores, however, is lower prices, said John Collins, director of the state’s medical marijuana agency.

“More branches create more competition,” he said at the board meeting. “You would expect that to happen.”

For example, the retail price of a gram of medical marijuana fell to $ 14.53 in July, from $ 15.67 per gram in January 2020, due to the sales boom.

Consolidate cannabis companies

The Illinois experience can be a glimpse into the future of Pennsylvania. In Illinois, the total cannabis market more than doubled in the first month after recreational use was legalized in January 2020, Zuanic said. Factors that can tarnish predictions of sales for medical to recreational activities include product access, affordability and range, and availability in nearby states.

Governor Tom Wolf and Lt. Gov. John Fetterman endorsed recreational marijuana legalization, which may help explain Pennsylvania’s appeal to pot investors. This year has been particularly busy for mergers and acquisitions in the state.

Between March and April alone, there were half a dozen deals worth $ 438 million to acquire cultivation facilities and retail rights, with Chicago-based Verano Holdings Corp. and the Trulieve Cannabis Corp. according to Marijuana Business Daily, a trade that publishes the top players based in Denver, Colorado.

Verano acquired three pharmacies in Cranberry Twp., Washington, and Monroeville for $ 110.3 million and then acquired Agri-Kind’s growing and processing facility in Chester. Verano also acquired Agronomed Biologics for $ 60 million, including cultivation, processing, and retail rights.

Over the same three-month period, Florida-based Trulieve, which operates Solevo pharmacies in Squirrel Hill, Washington and Zelienople, paid $ 60 million for a pharmacy license under Keystone Shops. Keystone has three locations in the Philadelphia area.

And in July, Florida-based Parallel opened its first pharmacy in the Pittsburgh neighborhood of Friendship under the company’s Goodblend banner, with plans for another store in Erie.

There’s no difference between marijuana used for medicinal or recreational purposes today, but that will change as the fledgling industry matures, said Nushin Rashidian, co-founder and publisher of Cannabis Wire, a news service with offices in Brooklyn, New York. In the coming years there will be products that are tailored to therapeutic and recreational uses.

“There’s a lot of overlap right now,” she said with the same regulators for both uses, the same marijuana supplier, “but that’s not going to last.”

“In 10 or 20 years there will be a fork,” she said. “There will be much more sophisticated wording on both sides. It’s a huge, huge, huge field, and I think we’re at the very beginning. “