As the numbers of patients and marijuana businesses continue to exceed all projections, the OMMA seems to be digging themselves out of the backlog of applicants.
Over the past few months, the OMMA has been sinking further under a flood of applications, but lacking the proper appropriations from the legislature, in order to hire permanent staff. They relied on temporary staffing contractors and had to devote more time to training.
But in the run-up to Easter weekend, a major accomplishment was achieved. Over 10,000 new licenses were issued, eclipsing the previous record of 5,000+.
Statutes require the OMMA to issue a license within 14 days, unless a known problem exists in the forms submitted online. But the OMMA's weekly tweets indicated that they had a typical backlog of about 12,000, either rejected or awaiting action. Now that backlog is around 7,000.
Some of those are likely to be from patients who have given up or have deceased. But many more are forms which just needed additional clarification or documentation. And it's likely that every application sits en queue for over a week before the staff even gets to a first review.
Projections on Patient Licenses
Since around Valentines Day, the OMMA has been issuing weekly patient numbers in the 1,000/day range. There are now about 78 regular business days yet to be reported before we reach the 1 year anniversary of state licensing. This means that we could reasonably expect about 78,000 more licenses to be issued, and perhaps a backlog of 7,000 additional backlog applications filed before August 25th will be granted shortly after.
That gives us a projection of 182,000 licensed patients in Oklahoma, by Labor Day (early September).
Business Viability Improves.
Last fall we started talking about the business viability for retail dispensaries in Oklahoma. Prior to October 26th, dispensaries could only legally sell bedding plants. But legal medications started showing up in late November. Before December first, the few hundred known dispensaries were operating in an unsustainable market. This was because there were only about 20 patients per dispensary. And cannabis medicines were so high priced that black market distributors were further impeding on the viability of dispensaries. If a dispensary can only sell a month's supply of medication to one patient per day, it's nearly impossible to stay in business and pay the 70% income tax that the federal govt. imposes on cannabis businesses.
But the conditions are now favorable for many more retail dispensaries to open up. Medicines are in greater supply, testing standards are in place to assure quality & safety, and the legislature appears to have fully weighed in on regulatory framework.
We are now at the point where we can begin squeezing out the black markets. there will always be a black market when tax policy creates sufficient incentives to skirt the law. But patients have an assumed right to grow their own medicine, making it impossible to confiscate untaxed cannabis medicines from the possession of a licensed patient, regardless of where he acquires his treatment meds.
Sales & Taxation Growth
Sales of cannabis medicine products have been exploding this year. Over $18 million in sales happened legally in Oklahoma just in April. If this activity levels off at current rates, the state will be collecting direct taxes on transactions at over 42 million per month. that's not even taking into account the taxes on income from the employees or the business income taxes.
If patent licensing continues at the current pace, by this time next year we may well see monthly sales in the $40 million range. that would equate to the state tax commission collecting around $6 million every month.
But patients are also growing in the political influence at the state capitol. Many are demanding that this medicine be treated like any other prescribed drug and that sales be tax exempt. One compromise we may soon see is a removal of the state excise tax(7%) and only charging the state & local sales tax.(4.5% state + local sales tax rate). Most communities have an effective retail sales tax of 8-10%.
Looming Federal Policy
While the federal govt. seems content to let states determine marijuana policy, they still use the tax code to gouge the distribution of marijuana with a 70% tax rate. This essentially means that a dispensary can deduct the cost of the wholesale goods they sell, but nothing else. they cannot deduct payroll, building rental, utilities, group health insurance, fixtures, advertising, or any other common business deductions.
This is a major factor in the cost of medicines that patients must ultimately pay for. In other words, most of the cost