03 Jul Need vs. Want: Examining the Cannabis Market Divide
Medical marijuana sales channels are struggling in the United States. Still illegal at the federal level, this market segment is dependent on sales channels that developed out of the need to have some level of state government substance control. Physicians who prescribe cannabis for patients act as de facto gatekeepers, controlling distribution by giving it to those who “need” to treat a condition or alleviate side effects versus those who “want” the product for recreational use. This line of distinction, however, is beginning to blur.
Many conditions are treated and health benefits obtained from the use of cannabis. Patients benefit from the use of medical marijuana for pain management, seizures attributed to epileptic episodes and other syndromes, glaucoma, and a wide range of mental and neurological disorders. A search on ClinicalTrials.gov shows that there are a number of open clinical studies underway to test for the existence of health benefits attributed to dozens of medical conditions associated with cannabis use.
More substantial scientific research is necessary to prove to physicians that there are both condition-specific and complementary health benefits to be obtained through cannabis use in order to motivate them to prescribe cannabis to the patient if warranted. There are two cannabis-derived prescription drugs that have FDA approval—Dronabinol and Nabilone—that are used to treat nausea and vomiting episodes among cancer patients undergoing chemotherapy and other chronically ill patients.
Meanwhile, if the medical cannabis industry wants to promote complementary health benefits of cannabis to potential medical users through various types of media, then they—in theory—must obtain a government-approved qualified health claim through the U.S. Food & Drug Administration.
Because cannabis is not legal at the federal level, all cannabis products are blocked from consideration for complementary health benefit claim approval. Although cannabis is currently outside the purview of the FDA’s health claim marketing compliance jurisdiction, which theoretically means suppliers are “free” to promote cannabis’ health benefits, certain claims could lead to increased scrutiny. Further, funding directly impacts the size of a study in terms of number of research subjects participating or sample size. And, of course, the bigger the sample size, the greater the confidence a reviewer has that the study’s findings are a likely reflection of the total population.
Recreational use, on the other hand, is much easier to market directly to potential users in states where it is legal to use cannabis for recreational purposes. There is no dependence on using health claims to motivate physicians to allow access to potential users because cannabis suppliers are allowed to sell their products directly to those who both “need” it and “want” it.
It is still a heavily government-controlled substance, but it is controlled in the same manner as alcohol beverages, through state-licensed stores, as opposed to prescriptive drugs, through the pharmacy channel with physician approval, which is less efficient overall. This transition is already underway in states that have legalized recreational use.
In April 2015 the state of Washington passed Senate Bill 5052, which effectively eliminated the distinction between medical marijuana dispensaries and recreational cannabis dispensaries and thus the role of the physician in the cannabis distribution channel. As more states consider legalization for recreational use in upcoming elections and those measures pass, then the industry should expect a slow dismantling of the “transitional” medical marijuana distribution system likely in place in favor of a more efficient model.
In the long run, only one of the two market segments is likely to survive and the outcome is wholly dependent on the actions of the federal and state governments. However, recent trends suggest that there are significant headwinds facing the medical marijuana sales channel versus the recreational channel’s tailwinds, and it is likely that the recreational channel will become the dominant business model for years to come given legalization is expected in additional states.
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