Medical marijuana business may have met its match

An employee packages a patient's cannabis at a medical cannabis center in Lakewood, Colorado.
Matthew Staver | The Washington Post | Getty Images
An employee packages a patient's cannabis at a medical cannabis center in Lakewood, Colorado.

Medical marijuana has new competition, and it's fierce: Sales of recreational pot in Colorado are growing faster than sales of medical pot, even though medical marijuana is cheaper because of a lower tax rate.

That trend will continue, according to the most thorough analysis yet of the two, side-by-side legal markets.

GreenWave Advisors, which provides analysis for the cannabis industry, reports that medical marijuana sales growth in Colorado dipped in 2014, as did the number of new medical cardholders.

"We forecast the average patient count will continue to decline from approximately 114,000 in 2014 to 99,000 by 2020," GreenWave said. At the same time, GreenWave predicts that the recreational side will see compound annual growth of 20 percent, "with likely upside as the market expands into new jurisdictions."

Is the future of medical marijuana going up in smoke? GreenWave said current fundamentals indicate that eventually, there will be only one legal marijuana market—one that combines medical and recreational under one set of regulations and a single tax rate.

There's also a chance that medical pot will find ways to differentiate itself from the for-fun kind.

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"We believe that the medicinal use market will recalibrate when the pipeline of new, more targeted medications become available and as the medical profession gains more comfort in 'pushing' a marijuana treatment rather than a patient having to 'pull' a prescription," writes GreenWave's Matthew Karnes.

Leslie Bocskor, managing partner of Electrum Partners, an incubator for legal cannabis start-ups, took that prediction about medical pot's future even further last week. He told a group in Las Vegas that one of marijuana's most promising future markets will take cannabis beyond easing problems to curing them. He said there will be markets for pharmaceutical and "nutraceutical" products—meaning supplements and the like. "There will even be a veterinary market," he said.

One problem for those who'd like to see a separate medical marijuana market is that cannabis remains a Class I drug, which means the federal government sees no health benefit to it. Jan Carlos Byl of pot-cultivation consulting firm MedCanna said he would like to see the drug given a less restrictive classification "sooner rather than later, because it opens up research."

Byl said that while many proponents claim there are elements in the cannabis plant that could be very helpful in terms of health, legally recategorizing marijuana "is a key element to being able to definitely, or at least with a higher degree of certainty, say, 'yes or no—this is hogwash or this is legitimate.'"

CORRECTION: This version corrected the description of GreenWave Advisors: It's provides analysis for the cannabis industry.