The burden for stocking the shelves of Utah’s new medical cannabis pharmacies has largely fallen on four of the state’s eight approved cultivators, newly released data shows, while the remaining growers have barely made a dent in demand for the plant-based treatment.
State records shared with The Salt Lake Tribune in response to a public information request show that half of Utah’s growers are responsible for about 96% of the medical cannabis harvested to date. Others have contributed only a few hundred pounds of cured cannabis in the year-plus since landing a license, irking growers who say they’ve been hustling to ease product shortages and keep prices low.
“You have to try to put out that little product,” said Narith Panh, chief strategy officer for Dragonfly Wellness, the state’s top-producing grower so far. “Anybody in their own garage can put out the same amount of product that some of these producers are putting out right now.”
But slower-moving growers say their relatively low harvest totals point to the challenges of pioneering a brand-new industry and have nothing to do with lack of motivation.
Desiree Hennessy, executive director of the Utah Patients Coalition, said she’s heard about a grower who lost an entire harvest to fungus. Others struggled to raise their first crops during the winter in less-than-ideal conditions, and some had meager experience in the industry and faced a steeper learning curve.
Overall, she’s confident that the eight cultivators are committed to the state’s 9-month-old cannabis program.
“It’s really easy to look at somebody else and say they’re not doing their best, or they’re not even trying,” said Hennessy, adding that testing delays are also bogging down the flow of cannabis product. “But when you talk to the growers, they’re very emotionally invested. It’s very important to them that they serve patients.”
Upcoming reviews, troubling audit
However, the cultivators might have to answer for their harvest totals in coming days during an annual state performance review, aimed at evaluating whether the growers are living up to the promises they made in applying for the $100,000-per-year licenses. The Utah Department of Agriculture and Food (UDAF), which declined to comment for this article, is holding a public hearing on the license renewals later this month.
A recent audit of UDAF under the leadership of former Commissioner Kerry Gibson has brought renewed scrutiny to the state’s cannabis cultivators by flagging several potential problems with the way state officials doled out the eight lucrative growing licenses. Among other things, Utah auditors found evidence of possible collaboration between members of the committee awarding the licenses and questioned whether senior agency management exerted influence over the process.
At least three cultivators won licenses because of practices that auditors found worrisome, according to the report.
And Justin Arriola, a cannabis business consultant and Utah patient advocate, said the harvest totals compound concerns about the process.
“When you see those very low numbers, that’s very troublesome,” he said. “There are a number of people who applied for licenses, who did have capital, who did have expertise, who would very likely have outperformed those numbers by a very large margin.”
The data released this week by UDAF reported harvest totals for the eight cultivators but did not identify which grower produced each amount. When asked for this information, the state agency refused and cited a section of the public records law that protects trade secrets and commercial or financial information from disclosure.
The department did, however, link the harvest amounts to the county where each cultivator is based, making it possible to identify several of the companies.
Dragonfly, the only licensee centered in Sanpete County, far outstripped the other seven cultivators by churning out more than 6,853 pounds of cured cannabis, according to the records. By comparison, the second-highest producer yielded 1,859 pounds.
Tryke Companies Utah, the only cultivator in Tooele County, has contributed 1,778 pounds of cured cannabis to the program, while Weber County-based Harvest of Utah has produced about 155 pounds.
The two lowest-yield cannabis growers — cultivating roughly 82 pounds and 69 pounds — are both in Salt Lake County, where Wholesome Ag and Zion Cultivars are located. Panh said these amounts would keep a busy pharmacy running only for a couple of weeks.
Seth Gomm of Zion Cultivars said introducing medical cannabis to local leaders and ramping up cultivation sites have taken some time, but he expects this work will translate into higher harvest totals over the next few months.
Medical cannabis “was a new animal for everyone, and so everyone has to get used to how the new reality works,” he said. “As I talked with the local governments, I had some that were very guarded and didn’t want to cooperate, but most of them were great and were going out of their way to accommodate us.”
Zion Cultivars recently won approval to add another 20,000 square feet of cultivation space to the 100,000 square feet it already has and has completed a major harvest in recent weeks, and Gomm said the totals shared by the state don’t reflect that latest haul. The UDAF data was accurate as of Dec. 1, but the agency stressed that the numbers can change on a daily basis.
However, Panh and Matthew Page, chief operating officer and part owner of Oakbridge Greenhouses, said all the cultivators dealt with the same challenges in entering a nascent industry and contend that those difficulties are no excuse for failing to produce. In fact, both Panh and Page argue that their locally owned companies faced much bigger financial and logistical hurdles than some of their competitors, multistate operators with deeper pockets.
“We have less money than anybody else by far,” Panh said. “So really, it’s just a lack of of willpower. ... Anybody could be doing what we’re doing right now if they made the financial decision to invest in the state of Utah.”
An emerging market
Panh said he suspects that some growers are making a financial calculation by starting slowly and waiting for Utah’s cannabis market to mature before expanding their farming operations. Sure enough, overall sales revenue at Utah medical cannabis pharmacies has steadily climbed from about $217,000 in March to about $3.4 million in October, the last month for which data is available.
But a wait-and-see approach, Panh says, is not fair to Utah patients who depend on a reliable supply of cannabis to treat conditions ranging from cancer to epilepsy.
Advocates and growers alike agree that certain cannabis products are in short supply at the state’s pharmacies, a problem that can drive up prices for patients. Page, who indicated that Oakbridge is one of the four top growers but declined to give a specific harvest amount, said the failure of his competitors isn’t in the best interests of his company or the program as a whole.
“We wish them as much success as possible,” he said. “Our fear is that they’re not performing, they’ll lose their license or get bought out ... and a billion-dollar company comes into the market, which their point is to maximize their profits. And then that would be detrimental to the patients.”
Arriola, who’s working with a cannabis processor, said buying marijuana from growers is costly and requires relationship-building — since some cultivation companies also hold pharmacy licenses and are steering most of their product onto their own shelves.
And Hennessy said the product pinch is likely to increase in the new year, when patients no longer will be legally permitted to buy their cannabis from out-of-state dispensaries and bring it back into Utah. Legislators established that cutoff date in expectation that Utah’s market would be self-sustaining by this point, she said.
“We were hoping that all of the grows would be producing enough and that we would be able to have flower and [vape] cartridges and tinctures and gummies and salves on the shelves in Utah,” she said. “But we’re struggling just to keep enough vapable flowers and cartridges.”
She said she’s lobbied Utah lawmakers to extend the deadline, but there’s been little support for such a move.
Gomm said he understands frustrations over product supply and pricing, adding that Zion Cultivars is a Utah company that has listened to the stories of patients and knows that many struggle to pay for cannabis treatments.
“We want to do all that we can,” he said, “to bring down those prices.”