An ‘Amazon for marijuana’: Robert Gehrke explains what led to Utah’s medical marijuana turf war

The potential expansion of at-home cannabis deliveries has some dispensaries concerned about market saturation and unfair competition

A bill making its way through the Legislature could significantly ease restrictions on medical marijuana home delivery — a proposal that has sparked a bitter turf battle and some are saying would create “Amazon for marijuana.”

In 2021, the Legislature legalized home delivery of medical cannabis products by licensed couriers, but currently, the shipments have to originate at one of the state’s 15 licensed cannabis dispensaries spread around the state.

As a practical matter, that has limited the scope of home delivery. It’s not terribly cost-effective for a dispensary in Logan, for example, to deliver to Cedar City or St. George.

But a passage of Rep. Walt Brooks’ House Bill 72 would allow delivery orders to be shipped from cannabis processing facilities — which have no limit on the number of licenses available — direct to consumers.

If the bill, which has passed the House, becomes law, it has the potential to shake up the industry and has sparked a high-stakes battle between the brick-and-mortar dispensaries which have enjoyed a measure of state-sanctioned regional exclusivity and those in rural parts of the state that see the bill as a path to a toehold in more profitable urban areas.

Both sides have marshaled the state’s top lobbyists — many of whom have direct financial ties to the cannabis businesses — to try to sway lawmakers to their side.

Opponents of Brooks’ proposal suggest it is being done to help Zion Medicinal, which acquired a license for a dispensary in Cedar City and owns a processing facility in Murray. If the bill passes, Zion could use its northern location to break into the populous Wasatch Front market — which makes the dispensaries operating there anxious.

“This is literally the biggest change in the [medical cannabis] program since it was designed,” Chris Jeffrey, owner of WholesomeCo, told me. “I’m having a tough time understanding the real, true benefits.”

WholesomeCo operates a dispensary in Bountiful and does hundreds of deliveries a day, he said. It is one of the few that does.

But there is still value in patients interacting with the on-site pharmacist at a brick-and-mortar dispensary, particularly when so many of the 3,000 people getting cannabis cards each month are novices when it comes to the product. They need help in figuring out what is right for them.

Moreover, because there is no limit on the number of licensed processing facilities, existing dispensaries worry that out-of-state interests could easily snatch up a license — which costs as little as $35,000, depending on the type — and saturate the market (although a proposed change would restrict pharmacies to working with just one processing facility to make deliveries).

Much like Amazon did to so many brick-and-mortar stores, direct delivery will devastate dispensaries that invested millions in their operations, Jeffrey said. “Ninety percent is going to be direct-to-consumer,” he predicts. “Retail will become obsolete.”

Blake Smith, chief scientific officer for Zion Medicinal, says his company didn’t ask Brooks to make the change, but supports the change and would benefit from it.

“I’m not arguing it’s not good for me. It’s really good for me,” he said. “But I don’t think of it like that. I think about it from the standpoint of patient access.”

All it would do is let Zion deliver from its processing facility in Murray instead of shipping its product to the Cedar City dispensary and delivering them back to patients up north. In many instances, that would be the only way patients could get Zion’s products, since, he said, several dispensaries refuse to carry them, opting to promote their own.

“Let the competition play it out at the end of the day,” Smith said. “I think it’s about making good medicine and products and if people make good medicine, I don’t know what anyone would be worried about.”

That message resonates with Christine Stenquist, founder and president of TRUCE Utah, a leading patient advocacy group. Patients will still be able to see a pharmacist if they need to, but once they have figured out what works for them, they will have more products to choose from and that competition could drive down prices.

Whether orders ship from a dispensary or a processing facility, she said, is irrelevant to patients.

“I see it as a win for patients,” she said.

At its core, though, this is a turf war. These dispensaries operate where they do and how they do because that was the rigid system established by the Legislature, and those that benefitted from their location risk losing that advantage.

It also demonstrates that — similar to the state’s liquor control — the attempts to establish a rigidly regimented structure are conflicting with the reality of what patients want and how they want to get it.

It’s the patients that need to be the focal point in this debate. Obviously, home delivery shook the foundations of brick-and-mortar stores and now we see the potential for that happening in Utah’s nascent medical marijuana program.

But if a wider selection of safe, effective products can be delivered to consumers in a cost-effective manner, that has the potential to be good for patients and the program. Rather than trying to fight the change, the effort should be to create a level playing field that gets consumers what they want and need — even if it comes via “Amazon for marijuana.”