Boom and Bust

While dispensaries see sales increase, MMJ certification businesses may need to find new model

The dispensary side of the medicinal cannabis industry has flourished during the pandemic, but what about those docs who provide the recommendations that allow people to get a license to use marijuana?

These certification clinics have weathered the coronavirus but face a challenging future now that patients only have to review their cards every two years and the possibility that voters may legalize weed for recreational purposes.

While there has been a huge increase in pot sales during the lockdown and a wave of new MMJ patients, certificate providers are likely going to have to find a new way of doing things in order to survive in a yet-to-be-defined marketplace.

The Arizona Department of Health Services provides monthly reports on the MMJ industry tracking information including monthly and cumulative amounts of pot sold, but AZDHS also tracks certification trends.

At the beginning of 2020, there were 230,892 total active cards, with 223,285 allotted to individuals, or qualifying patients.

At the beginning of the pandemic in March, the number of qualifying patients increased to 230,317, and by the end of August, the most recent data available, that number had ballooned to 269,030, an increase of more than 38,000 people with legal access to weed from the beginning of the year.

But even with all the new patients, certification centers are seeing a drop in business. Part of that is the new rule extending the life of cards to two years, but part of it may be some people are expecting voters to approve Prop 207, which would legalize recreational use.

There are several business models in the state, from clinics with multiple offices and a stable of doctors to individual docs juggling the business side with patient care.

Tucson's Tumbleweeds Health Center has seven doctors working as independent contractors, as well as six employees and a handful of volunteers.

Business owner Kim Williams says Tumbleweeds, which is nearing its nine-year anniversary and is one of the oldest certification centers in the state, has not been hit as hard as some providers, but business is down given the current environment.

"We're still in the game," Williams said. "The snowbirds are not snowing in and with COVID and Prop 207 on the ballot, it's been a perfect storm."

Much of Tumbleweeds' business in the past few months has been patients seeking new cards, but she thinks that aside from snowbirds delaying return, patients that should be renewing cards are holding off in case Prop 207, Smart and Safe Arizona, passes.

To that end, Tumbleweeds has devoted an entire section of its website to outlining the differences between what's allowed for recreational pot and what patients stand to lose should they give up their cards.

"Once people realize the differences, they'll stay with medicinal, which helps them maintain rights and privileges they won't have with legal," Williams said.

For example, MMJ patients are allowed 2.5 oz a month instead of just one ounce under Prop 207 and it can be in any form. Recreational possession in amounts over one ounce would be prosecuted as a felony.

Among the other differences noted on the Tumbleweeds' web site: Without a weed card, packages for edibles packages will be limited to 100 mg and each piece can't have more than 10 mg.

Dr. Reeferalz is another popular clinic, with five locations in the Phoenix metro area and one in Tucson.

"We've definitely been affected by the lockdown," said Taryn Tia, Dr. Reeferalz Tucson manager. "We were getting a lot of first-time certifications, but people have been waiting to get recertified. I think they've been waiting to see if legalization passes, but I don't think they realize it could take as long as 18 months to be implemented."

Tia added that there was a natural slow-down when the new certification rules were set in place, but she echoes Williams' concerns for patients who think recreational will be a better deal.

"I think if people are educated [about the implications of legalization] they'll maintain their certifications," Tia said. "People think they'll be able to just walk in to Circle K and buy it if it passes, but it's not going to be like that."

She also thinks the tax revenues will not be as robust as projected in 207's analysis by the Joint Legislative Budget Committee, which claims an additional $250 million in tax revenue to the state annually.

"A lot of people will start growing and the tax revenues won't be what they've expected," she said. "It's hard to get a good read on it, though."

To offset losses in revenues, both Tumbleweeds and Dr. Reeferalz have begun a telemedicine program for recertifications that has been allowed by Gov. Doug Ducey during the coronavirus pandemic.

Doctor Heather Moroso has been hit particularly hard this year, due in part to her patient-friendly practices surrounding the rollout of two-year certificates.

"My business has [also] been affected because legalization is on the ballot and people are waiting for that," she said.

As a single doctor with a solo practice, she does not have the time to devote to marketing that the others might have.

"My business is 90 percent doctoring and 10 percent business," Moroso said. "It comes out of necessity and is a matter of not having the time. I play a lot of whack-a-mole."

Additionally, at the outset of the pandemic shutdown Moroso purchased a building in South Tucson that is slowly morphing into a naturopathic clinic. On the positive side, given the reduction in business for her certification practice, she has more time to devote to that project.

"I'm on a five-year plan with the clinic. I need to have time to do this," she said. "Certification will be part of the practice, because it's what I love. People need to have access to medicine."

Regardless of how the dynamics shake out, everyone will likely have to adjust to a business landscape that includes legalized and heavily regulated weed.

"We have a business model designed to grow no matter what the outcome," Dr. Reeferalz' Tia said. "I think [the business] is going to go full circle, from medical to recreational and back to medical."

Correction: A column titled "High Times" (Tucson Weekly, Sept. 24) identified Aari Ruben as owner of Bloom Dispensary. Ruben is the owner of Desert Bloom Re-Leaf Center, located at 8060 E. 22nd St. #108, Tucson.

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